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                               1 of 614 DOCUMENTS

                        Financial Times (London,England)

                          November 26, 1986, Wednesday

Turmoil In The White House;
Troubleshooting Aide At Heart Of The Scandal

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Pg. 7

LENGTH: 278 words


Lt-Col Oliver North, the top National Security Council official at the heart of
the arms sale scandal, is one of the handful of globetrotter aides who revelled
in the role of President Reagan's troubleshooter.

He emerged as a controversial figure last summer, when it was disclosed he had
helped to set up a private aid network to fund Contra rebels in Nicaragua. It
was the first hint of NSC involvement in the Contra funding and raised questions
about the way the White House was seeking to skirt a congressional ban on
military aid to the Contras.

Yesterday's revelation that Lt-Col North, a 43-year-old marine from Texas, had
diverted up to Dollars 30 m in proceeds from arms sales to Iran to the Contras
via Swiss bank accounts establishes a link which some had suspected but few had
dared believe.

The link is essentially through Lt-Col North, though there are other characters
and companies who have made fleeting appearances on stage.  One key figure is
the retired air force major-general Richard Secord, one of several US citizens
engaged in helping the Contras.

He is reported to have been the first passenger, along with a CIA interpreter
and Lt-Col North, on a secret US Government mission to Iran last May, led by the
President's former National Security Adviser, Mr Robert McFarlane.

In his five years at the NSC Lt-Col North has been involved in many sensitive
missions.  He led the hunt for those responsible for the Beirut truck bomb which
killed 241 marines; he planned the mid-air interception of the airliner carrying
the Achille Lauro hijackers; and he helped plan the Grenada invasion and last
April's US bombing raid of Libya.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               2 of 614 DOCUMENTS

                        Financial Times (London,England)

                           November 28, 1986, Friday

Reagan Strongman Who Shoots From The Lip

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 621 words


Mr Donald T Regan, the 67-year-old White House Chief of Staff, was until this
week President Reagan's strongman a pivotal figure who in two years has amassed
power far beyond that of his predecessor, Mr James Baker, now serving as US
Treasury Secretary.

But in the wake of the disclosures of secret White House dealings with Iran and
the Contra rebels in Nicaragua, a good number of accusatory fingers are pointing
at Mr Regan.

The former head of Merrill Lynch, the New York brokerage house, has disavowed
any knowledge of the deals.  "Does a bank president know whether a bank teller
is fiddling around with the books?" he said on Wednesday, "No."

And yet in an interview with Time magazine last week, Mr Regan, acknowledging
his high profile role, boasted "...  I am up to my elbows in foreign policy
because I am one of the few who know the full story."

This capacity to shoot from the lip is likely to leave Mr Regan exposed to
fierce criticism in coming weeks.  A more serious question, posed both by
Democrats and Republicans close to the President, is the competence of the White
House staff and the all-powerful role of Mr Regan.

Representative Dick Cheney, the Wyoming Republican and former Chief of Staff in
the Ford Administration, reflecting widespread scepticism that only two White
House aides were involved in the scandal, said: "You have to say it is a pretty
fundamental flaw that would allow a lieutenant colonel on the White House staff
to operate in deficiency of the law."

Mr Regan has pointed out that the National Security Council staff, specifically
the sacked aide, Lt-Col Oliver North, reported not to him but to Vice-Admiral
John Poindexter, the President's National Security Adviser who resigned this
week.

But Mr Regan failed to acknowledge that unlike his predecessors he sat in on
many of the personal briefings given by Mr Poindexter to Mr Reagan, in stark
contrast to other Chiefs of Staff.

This keenness to be at the centre of power reflects the pyramid command
structure drawn up by Mr Regan when he swapped jobs with Mr Baker following the
landslide re-election of President Reagan in 1984.

It is markedly different from the uneasy White House troika that Mr Baker formed
with Mr Edwin Meese, now the US Attorney General leading a Justice Department
inquiry into the Iran affair, and Mr Michael Deaver, the image specialist and
close friend of Nancy Reagan.

During the first Reagan Administration, it was probably true that then Mr Reagan
had too many figures offering advice and seeking to establish their own power
bases in the White House.  In the second Administration, with the imperious Mr
Regan at the helm, it is widely believed that there are too few sources of truly
independent advice.

Some key players remain such as Mr Patrick Buchanan, the president's speech
writer and right-wing columnist, and Mr Tom Dawson, Mr Regan's deputy, and Mr
Mitch Daniels, political adviser.

But the fact is that Mr Reagan continues to rely on trusted allies.  Mr William
Casey, head of the Central Intelligence Agency, is a frequent visitor to the
Oval Office.  Mr Meese, who over the past two years has expended his energies on
anti-pornography drives and controversial interpretations of the constitution,
now appears to have moved back centre stage as leader of the Justice Department
inquiry.

And then there is Nancy.  The President's wife's influence is not to be
underestimated, particularly when it comes to personnel changes.When Mr Regan
admitted what in retrospect looks like a disastrous tactical error last week in
pushing foward the President to take "full responsibility" for the arms sales
before the Iran-Nicaragua link had emerged, she must have winced.

LANGUAGE: ENGLISH

GRAPHIC: Picture Donald Regan, exposed to criticism; Drawing

                   Copyright 1986 The Financial Times Limited


                               3 of 614 DOCUMENTS

                        Financial Times (London,England)

                          November 29, 1986, Saturday

White House Saves Iran Papers

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 18

LENGTH: 391 words


The White House yesterday ordered staff to preserve telephone logs, and "any and
all records" for the US Justice Department inquiry into the Iranian arms
scandal.

Officials in Washington said investigators would try to establish whether Lt Col
Oliver North, the National Security Council aide sacked for his role in the
affair, shredded documents relating to the diversion of up to Dollars 309 m (216
m Pounds (pds)) of profits from US arms sales to Iran and Contra rebels in
Nicaragua.

The White House directive was seen as an attempt to head off the controversy and
speculation about the extent of senior officials' involvement in the scandal.

Mr Donald Regan, White House Chief of Staff, yesterday denied he knew about the
diversion of funds to the Contras.

An unnamed White House official was quoted by US wire services as saying Mr
Regan had been informed by Lt Col North.  Mr Regan said: "If anybody thinks they
have got anything, have them take it to justice."

The Iranian arms scandal is escalating as the US press uncovers more alleged
details of the National Security Council operation, the role of the Central
Intelligence Agency and the extent of knowledge of top Administration officials.

The Justice Department has broadened its inquiry beyond the White House to study
the role of the CIA and its director, Mr William Casey.  The areas of inquiry
are the Swiss bank accounts and CIA efforts to help the Contras fighting the
Marxist government in Nicaragua.

The CIA has been involved in many undercover operations to help anti-Marxist
guerrillas in Afghanistan, Angola and Nicaragua.  Mr John McMahon, Mr Casey's
deputy, resigned in February in what was seen as his unhappiness with these
operations.

The Senate Intelligence Committee will open formal hearings of the scandal on
Monday and will require all witnesses to testify under oath.

Yesterday, in a separate development, an Oregon businessman told the New York
Times government intelligence sources told him the US Defence Department was
planning to buy weapons for the Contras with profits from the Iran arms sales.

The businessman, Mr Richard Brenneke, said he had tipped off a senior military
aide to the US Vice President, Mr George Bush.  His memoranda to Mr Bush were
released to defence lawyers in an Iranian arms sales case being tried in New
York.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               4 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 4, 1986, Thursday

Bush Admits Administration Mistakes On Iran Arms Deals

BYLINE: Leonel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 48

LENGTH: 576 words


Mr George Bush, US Vice President, yesterday broke his public silence over the
Iran arms scandal, and acknowledged that mistakes had been made by the Reagan
Administration, damaging its credibility before the American people.

Mr Bush, whose hopes of securing the Republican presidential nomination in 1988
have been hit by the scandal, said he was in favour of full disclosure of the
facts.  "Let the chips fall where they may," he said.

However, Vice Admiral John Poindexter, who resigned last week as President
Reagan's National Security Adviser, took the fifth amendment yesterday in a
closed-door appearance before the Senate Intelligence Committee, his attorney
said.  This allows a witness to refuse testimony on the grounds that his answer
might incriminate him.

Mr Poindexter's action follows a similar move by Lt-Col Oliver North, the White
House aide sacked for his role in the affair.  Their refusal to answer questions
conflicts with Mr Reagan's pledge to allow officials to co-operate fully with
Congress.

Mr Bush's speech in Washington yesterday came amid newspaper reports about
alleged involvement by the Central Intelligence Agency in funding rebel forces
in Afghanistan through a Swiss bank account also used for depositing profits
from arms sales to Iran.

Further calls were also made for the resignation of the White House chief of
staff, Mr Donald Regan.

Mr Bush steered a fine line between defending Mr Reagan and distancing himself
from the White House.

He denied any knowledge of the diversion of up to Dollars 30 m (21 m Pounds
(pds)) from secret arms sales to Iran, to Contra rebels in Nicaragua.  He added
that he opposed paying any ransom to free American hostages and any effort to
circumvent the laws of Congress.

Mr Bush sought to separate the president's decision to sell arms to Iran from
the chanelling of funds, through Swiss bank accounts, to the Contras by Col
North.

He called the arms sales legitimate in order to bolster moderates in a
strategically vital Gulf state but conceded that the policy was "arguable" in
the light of what he described as the hatred and mutual suspicion between Iran
and the US.

Mr Bush said he shared that hatred but it was in US interests to prepare for the
successor of Ayatollah Khomeini, the Iranian Fundamentalist leader who has
called America the "Great Satan."

On the Contras seeking to overthrow the leftist Sandinista government in
Nicaragua, Mr Bush said he still backed US support for their cause.

Mr Bob Michel, Republican minority leader of the House of Representatives,
called for the resignation of Mr Regan, supporting earlier demands by the
influential Republican senator from Indiana, Mr Richard Lugar.

The Senate Intelligence Committee, continued its closed hearings, recalling Mr
Poindexter, who declined to offer testimony to the committee on Tuesday, saying
he needed more time, according to reports in Washington.

Col North is also seeking immunity from prosecution before offering full
disclosure of the facts, according to reports.  Some senators said yesterday
they were unhappy about extending immunity - which is within the rights of the
committee - because it could protect officials further up the ladder in the
White House.

Although Mr Reagan has pledged full co-operation from Administration witnesses,
this has yet to occur because of the delicate legal position of witnesses such
as Col North who may have to face criminal charges.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               5 of 614 DOCUMENTS

                        Financial Times (London,England)

                          December 11, 1986, Thursday

Poindexter, North 'Should Be Given Legal Immunity'

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 581 words


Mr William Bloomfield, the leading Republican member of the House Foreign
Affairs Committee said yesterday that he is going to press urgently for the two
former White House officials at the centre of the Iran arms affair to be given
immunity from prosecution to make it easier for them to tell Congress about the
background to the scandal.

On Tuesday former White House Chief of Staff Vice Admiral John Poindexter and Lt
Col Oliver North, who was dismissed as a member of the National Security Council
staff, citing their rights under the Fifth Amendment to the constitution, both
refused to answer questions put by the committee members on the ground that they
might incriminate themselves.

Republicans are concerned about the sight of former top Reagan Adminstration
officials on national television taking such action at a time when President
Ronald Reagan is pledging full disclosure of the facts.

"I am going to recommend that we give these men immunity ...  as soon as we
possibly can," he said.  He expects to be a member of the special House
committee to be formed early next year to investigate the affair.

The threat which the Iran controversy poses to President Reagan's credibility
was underscored yesterday by a CBS/New York Times poll which showed that 47 per
cent of Americans believe the President is "lying" when he says that he did not
know money was being diverted from the Iran arms sales to the Contra rebels
seeking to overthrow the Sandinista Government in Nicaragua.

Significantly the poll also showed no sign that President Reagan's approval
rating has recovered after slumping an unprecedented 21 points last month after
the Iran affair became public.  The poll suggests that 47 per cent of Americans
approve of the job he is doing compared with 46 per cent in November.

Republicans such as Senator Richard Lugar who are warning that the President is
not moving swiftly enough or decisively enough in trying to combat the fallout
from the Iran disclosures will not find the poll results reassuring.

Amid continuing calls from Sen Lugar for his resignation, Mr William Casey, the
director of the Central Intelligence Agency was testifying on the final day of
hearings by the House Foreign Affairs committee.

Congressman Gus Yatron said Mr Casey told the closed-door hearing that he
learned of the Iran-Contra link just two weeks ago from Atorney General Edwin
Meese.

He's saying they (the CIA) have no knowledge of what happened," Mr Yatron, a
member of the committee, said after the session.

Separately, there were reports that members of the Senate Intelligence committee
which is investigating the affair in closed door hearings has so far been unable
to trace the flow of profits from the arms dealings.

The White House has said that between Dollars 10 m and Dollars 30 m of profits
from the arms sales were channeled to the Contra rebels through numbered Swiss
bank accounts.

The justice Department is asking for an independent counsel to investigate the
dealings citing Lt Col North as one of the targets of the investigations.

Senator David Durenberger, the Republican chairman of the Senate committee said
"We do not know how much money the Contras got, or if they got it at all."

Mr George Shultz, the US Secretary of State, said during his trip to Europe that
he had reassured European foreign ministers that the Iran affair was not like
Watergate.  "In this case there is the desire of the President to see everything
comes out."

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               6 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 16, 1986, Tuesday

White House Offers To Send Regan To Testify On Arms Deal

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 210 words


The White House offered yesterday to send Mr Donald Regan, the Chief of Staff,
to Capitol Hill to tell Congress what he knows about the controversial Iranian
arms deals.

After the White House announcement leaders of the US Senate Intelligence
Committee decided to recommend that Mr Regan testify. Santor Patrick Leahy, the
committee's vice chairman, said he and Senator Dave Durenberger, the chairm,
"will recommend to the committee that it ask Mr Regan to come up and testify."

Mr Regan, who has been under persistent pressure to quit in the wake of the
affair, has consistently maintained that he did not know about the transfer of
funds from the US arms sales to Iran to the Contra rebels in Nicaragua.  He has
said that National Security Council staff did not report to the President
through his office.

The pressure on Mr Regan to quit, has come from Capitol Hill, but it has also
been reported that friends of President Ronald Reagan from his days as Governor
of California, have also been urging him to reconstitute the White House staff
in order to make a fresh start for his last two years in office.

The New York Times reported yesterday that in recent weeks Mr Michael Deaver has
re-emerged as an unofficial adviser to the President.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               7 of 614 DOCUMENTS

                        Financial Times (London,England)

                          December 17, 1986, Wednesday

Reagan Urges Immunity For Former Aides

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 762 words


President Reagan, seeking to deflect criticism that the White House is not
living up to its promise to disclose the full background to the Iran arms
scandal, appealed to Congress yesterday to grant limited immunity from
prosecution to the central figures in the affair.

Mr Larry Speakes, White House spokesman, said: "It is the President's desire to
have the full story on Iran come out now." He urged the Senate Intelligence
Committee to grant "use immunity" to Vice Admiral John Poindexter, who resigned
last month as National Security Adviser, and Lt Col Oliver North, who was
dismissed at the same time.

Within hours of Mr Reagan's plea, Senator David Durenberger, the Republican
chairman of the key investigatory committee, the Senate Intelligence Committee,
said that a majority of the committee was not inclined to grant immunity.
Senator Durenberger and other committee members while conceding that testimony
from Admiral Poindexter and Col North could provide them quickly with crucial
missing details, have maintained that it is too soon to grant immunity.

"Use immunity" provides that testimony given to Congress cannot be used later in
a court of law against those granted such protection.

Both Admiral Poindexter and Col North refused to answer Congressional questions
last week on the grounds that the constitution protected individuals from giving
answers which might incriminate them.  Both Republicans and Democrats on Capital
Hill are resisting White House pressure to grant immunity.

Separately, the Senate leadership named the 11 senators who will form a special
Watergate-style committee which will begin to probe the Iran affair when
Congress reconvenes next month.

The committee will be chaired by Democrat Senator Daniel Inouye of Hawaii, who
served as a member of the congressional committee investigating the Watergate
scandal which brought down President Richard Nixon's Administration.

It will conduct a sweeping and politically embarrassing assessment of the Reagan
Administration's conduct of foreign policy.

White House pressure for immunity came as Mr Donald Regan, the President's
embattled Chief of Staff, went before the Senate Intelligence Committee in
closed session and faced questions about his role in the Iran arms dealings and
the structure of decision-making in the White House.

Congressional investigators are trying to discover how the allegedly illegal
decision to skim profits from the arms sales to Iran and transfer them to Contra
rebels in Nicaragua was taken.  Mr Robert McFarlane, a former National Security
Adviser, told Congress that he doubted that Admiral Poindexter or Col North
would have made the decision themselves but that a "higher authority" would have
had to approve it.

Mr Regan denied knowledge of the diversion of funds to the Contras.

He emerged from the hearing saying that "under oath" he had testified that he
"did not know of any diversion of funds from the proceeds of the sale of arms to
Iran to the Contras and I don't know of any such thing and I don't believe the
President of the US knows of any such thing."

Both President Reagan and Vice-President George Bush have also firmly denied
knowing about the diversion of funds.

Persistent questioning about Mr Bush's involvement forced his office on Monday
to release a detailed chronology of contacts between his national security staff
and inviduals linked to the private network supplying the Contras.

In another development, Mr Howard Teicher, a controversial member of the
National Security Council staff, announced that he had resigned.  The
announcement came as he was preparing to testify in closed session before the
Senate Intelligence Committee.  Mr Teicher headed the NSC's office of
political-military affairs, where Col North worked.

His decision came amid reports that Mr Frank Carlucci, newly-appointed director
of the National Security Council, was planning changes in the staff because he
was dissatisfied with its quality and wanted it to return to its traditional
co-ordinating role in foreign policy formulation.

It was reported from California that there was a burglary at the office of a
lawyer who represents businessmen linked to the secret arms deals with Iran.

According to police the lawyer, Mr Horace Dunbar, said the only item stolen was
a file containing information concerning the sale of weapons and nuclear
devices, which he described as reactors to Iran.

The file was on Iranian-born businessman Mr Albert Hakim, a business partner of
retired Air Force General Richard V Secord.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               8 of 614 DOCUMENTS

                        Financial Times (London,England)

                          December 18, 1986, Thursday

SECTION: SECTION I; American News; Pg. 5

LENGTH: 402 words


The military in the United Nicaraguan Opposition (Uno), the main Contra umbrella
group, is made up as follows:

The Nicaraguan Democratic Forces (FDN) with an estimated 12,000 men in Honduras
and about 2,000 (who make up the Jorge Salazar regional command) in the central
Nicaraguan provinces of Boaco and Chontales.

Kisan, the indigenous (predominantly Miskito Indian) organisation on the
Atlantic coast led by Wyclife Diego, which claims 800 men inside Nicaragua and
1,200 men in camps in Honduras.  A more accurate estimate would be half these
figures and a good number have not been fighting inside Nicaragua for the past
year or so.  There are also 200 men belonging to Kisan for Peace who have been
in peace talks with the Sandinistas for over a year.

Uno-Farn, led by Fernando Chamorro, based in Costa Rica, has around 1,000 men
but has not been militarily active for the past six months.

Outside Uno there is the Southern Opposition Block (BOS) based in Costa Rica,
led by Alfredo Cesar, which calls itself a social democratic grouping.  Since
Eden Pastora, their military leader, withdrew from the struggle last May (after
most of his commanders and men defected to Uno-Farn), the BOS has had no
practical military force.

Misurasata is also outside Uno.  An indigenous group, it is headed by Brooklyn
Rivera and based in Costa Rica.  Misurasata has probably between 500 and 1,000
men but has been militarily inactive for 18 months.

The Dollars 100 m in US aid (the last Dollars 40 m of which is subject to a
further Congressional vote in February) includes Dollars 5 m each for BOS and
Misurasata, even though they are not in Uno.

In practical terms, Uno is the FDN, which is by far the weightiest partner in
both military and political terms.  Since June this year, the BOS and Uno have
been holding monthly talks to draw up a joint declaration on a minimum programme
of government.  That declaration is expected in early January, but BOS leaders
say they do not plan to join Uno formally.

The three Uno leaders, Adolfo Calero, Arturo Cruz and Alfonso Robelo, have made
a great show of unity in the wake of the Iran-Contra scandal, but issues such as
civilian control over the military, which led to very public divisions last May
between "moderates" Mr Robelo and Mr Cruz on one hand and Mr Calero on the
other, have not been definitively resolved, according to sources close to Cruz.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                               9 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 19, 1986, Friday

Meese 'Ordered Halt To Contra Airline Probe'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 431 words


The Reagan Administration yesterday faced further embarrassing allegations of a
cover-up in the Iran arms scandal.

US Justice Department officials, responding to news reports, conceded that Mr
Edwin Meese, the US Attorney General and close friend of President Reagan, had
ordered a 10-day halt in an FBI investigation into a Miami-based Charter airline
linked both to the covert Iran arms sales operation and to the Contra rebels.

They said that Mr Meese had made the order at the request of Vice Admiral John
Poindexter, the President's former National Security Adviser who resigned over
his role in the affair.

Mr Poindexter apparently told Mr Meese that the FBI investigation into Southern
Air Transport in Miami could jeopardise efforts to free US hostages in Lebanon.

The disclosure is possibly damaging to the Administration since it raises
questions about whether Mr Meese did in fact know about the Iran-Contra
connection earlier than he has so far admitted.  The FBI meanwhile is examining
whether there was any attempt to obstruct justice.

Mr Meese testified for almost five hours on Wednesday before the Senate
intelligence committee.  He stuck vigorously to his previous assertions that
only two men - Lt Col Oliver North the sacked White House aide and Vice-Admiral
John Poindexter, former National Security Adviser - knew of the diversion of
profits from the arms sales to Iran to anti-Sandinista forces in Central
America.

The Senate Intelligence committee yesterday failed to resolve differences in
testimony about the President's own role in the affair.

Mr Robert McFarlane, the former National Security Adviser, stood by his earlier
sworn testimony that Mr Reagan gave advance approval of a shipment of US arms
via Israel to Iran in August 1985.

Mr Donald Regan, White House Chief of Staff, was recalled to testify before the
committee and also stood by his evidence.  Mr Regan, who has faced calls for his
resignation, said he was ready to leave if the President felt he was not doing a
good job.

The frustration within the White House over its failure to contain the affair
surfaced yesterday in published remarks by Mrs Nancy Reagan.  The President's
wife is widely reported to be furious at the ineffectual role of certain key
advisers, including Mr Regan.

She said in her first interview since the crisis broke: "He's disappointed at
not having been told the truth, and that's upsetting to him.  He wishes the two
men (North and Poindexter) would come forward and talk.  Those are the only two
men who know anything, really know what happened."

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                              10 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 19, 1986, Friday

Hasenfus Arrives In US To Cool Reception

BYLINE: Our Foreign Staff

SECTION: SECTION I; American News; Pg. 6

LENGTH: 304 words


Mr Eugene Hasenfus, the American pardoned after receiving a 30-year sentence for
running guns to the Contra revels in Nicaragua, arrived in Miami yesterday to a
cool reception from the White House.

Mr Hasenfus's release is widely regarded as a propaganda coup for the Sandinista
Government that will further embarrass the Reagan Administration, embroiled in
the Iran arms scandal.

Mr Daniel Ortega, the Nicaraguan president, said the release of Mr Hasenfus on
Wednesday night was "a Christian message and a New Year message to the American
people from the Nicaraguan people.  We trust and hope that this gesture of peace
...  will contribute to achieve peace."

However, a White House spokesman said the gesture fell short of what the Reagan
Administration believed necessary for improved relations between Managua
Washington.  "If the Sandinistas truly want to make a gesture, it should be
toward those in Nicaragua who oppose their oppressive policies," a spokesman
said.

Mr Hasenfus is likely to appear on Capitol Hill to testify in the widening
congressional investigations into the Iran arms affair.

It was Mr Hasenfus who helped expose the secret network in El Salvador used to
supply the Contra rebels in Nicaragua.

There has been some speculation in Washington about what Mr Hasenfus may have to
tell congressional legislators investigating the skimming off of profits from US
arms sales to Iran to the Contras.  Mr Hasenfus, it is argued, is disillusioned
and ready to talk.

In fact Mr Hasenfus has talked readily to both his Nicaraguan captors and to the
reporters who camped outside his jail in Managua.  He has named two former CIA
agents with links to Vice-President George Bush, but as yet nothing of substance
on the role of the pivotal figure, the sacked White House aide Lt-Col Oliver
North.

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                              11 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 19, 1986, Friday

Senate Recalls Regan Over Iran Arms Testimony

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 420 words


The senate intelligence committee probing the Iran arms scandal yesterday
recalled Mr Donald Regan, the White House Chief of Staff, to resolve
discrepancies in sworn testimony about President Reagan's role in the affair.

The committee also recalled Mr Robert McFarlane, the former National Security
Adviser, who told the committee last week that Mr Reagan gave advance approval
of a shipment of US arms via Israel to Iran in August 1985.  Mr Regan has said
that the President approved the shipment after it took place.

The conflict in evidence is important because any shipment by Israel to Iran
without prior approval by the President would be illegal under the Arms Export
Control Act.

In a second, potentially embarrassing development in the scandal, it was
disclosed that the Federal Bureau of Investigation has launched an inquiry into
why it was told by the Justice Department to delay an investigation into a
Miami-based airline linked to the covert arms sales operation and to the Contra
rebels in Nicaragua.

The FBI was told that its investigation might harm secret efforts to free
American hostages in Lebanon, and its director, Mr William Webster, has a memo
to this effect.

But at that time, the airline - Southern Air Transport - was only linked to the
Contra supply operation.  This raises questions about whether Mr Edwin Meese,
the US Attorney-General, who gave the order, knew about the Iran-Contra link
earlier than he has claimed.

Mr Meese testified for almost five hours on Wednesday before the Senate
intelligence committee.  He stuck vigorously to his previous assertions that
only two men - Lt-Col Oliver North and Vice-Admiral John Poindexter - knew of
the diversion of profits from the arms sales to Iran to anti-Sandinista forces
in Central America.

But several congressional officials pointed out yesterday that the
Administration had yet to produce conclusive evidence that up to Dollars 30 m
did in fact go to the Contras.

The frustration within the White House over its failure to contain the affair
surfaced yesterday in published remarks by Mrs Nancy Reagan.  The President's
wife is widely reported to be furious at the ineffectual role of certain key
advisers, including Mr Regan.

She said in her first interview since the crisis broke: "He's disappointed at
not having been told the truth, and that's upsetting him.  He wishes the two men
(North and Poindexter) would come forward and talk.  Those are the only two men
who know anything, really know what happened."

LANGUAGE: ENGLISH

                   Copyright 1986 The Financial Times Limited


                              12 of 614 DOCUMENTS

                        Financial Times (London,England)

                           January 10, 1987, Saturday

Arms Sales To Iran Linked With Hostages' Release, Memo Shows

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Back Page; Pg. 18

LENGTH: 593 words


The White House yesterday released secret documents which make it clear that in
recommending presidential approval of arms sales to Iran last January, White
House officials stressed that the sales were linked to the release of American
hostages in Lebanon.

Last November, when President Reagan first appeared on US television to present
his explanation of the Iranian affair to the American people, he denied he had
approved the deal as an arms for hostages swap.

A senior White House official insisted yesterday that the memorandum did not
contradict Mr Reagan's contention.

The memorandum, which provided the basis for an oral briefing last January to
the President by Vice Admiral John Poindexter, the then National Security
Adviser, says: "The hostages will be immediately released upon commencement of
this action." This is a reference to the proposed arms transfers to Iran.  The
memorandum prepared by Lieutenant Colonel Oliver North, Mr Poindexter's
assistant, also says that the sales "may well be our only way to achieve the
release of the Americans held in Beirut." It adds that further arms transfers
"would cease" if all the hostages were not released after the first shipment.

The release of the memorandum followed the publication in US newspapers of leaks
of its contents.  An early draft of the report being prepared by the Senate
Intelligence Committee on its closed door hearings on Iran arms sales which
finished last month was also leaked to NBC television news.

The White House, which has been pressing the Intelligence committee without
success to issue an unclassified version of the report, was quick to say that
the leaks "underscore the fact that the President knew absolutely nothing about
the diversion of funds from Iran to the Contras and that no such policy was ever
approved by the President."

The White House has said previously that it believes profits from the Iranian
arms sales were diverted to the Contra rebels seeking to overthrow the
Sandinista Government in Nicaragua.

But its latest memorandum suggests that the initiative for the sales came from
Israel, which was proposing to create conditions to help bring about a "more
moderate government in Iran."

At the time the memorandum was written, some arms shipments to Iran by Israel
had taken place.  In testimony to Congress, White House officials have differed
on whether Mr Reagan approved them in advance.

In pressing for the release of the Intelligence committee report and in
releasing the memorandum, the White House appears to think that while some of
the information may embarrass the President, in other respects it is less
damaging than the continued speculation about the President's role in the
affair.

Congressional officials are insisting that the Senate report is not a complete
record of the affair, not least because some key witnesses refused to testify.

Many questions, including what happened to the alleged profits from the arms
sales, and the roles played by individuals, what they knew about the deals and
when they knew it, will have to be addressed by the special congressional
committees set up earlier this week on Capitol Hill.

The NCB News leaks of the Intelligence committee report presented an
unflattering picture of Mr Poindexter and of Mr William Casey, CIA director.
NCB said the report indicated that Mr Poindexter had approved the transfer of
funds to the Contras because he "felt sorry" for them and that Mr Casey had been
less than candid with the committee when he appeared before it in late November.

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                        Financial Times (London,England)

                            January 12, 1987, Monday

Man Of Principle In Search Of Irangate Truth

BYLINE: Lionel Barber

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 896 words

HIGHLIGHT:
Lionel Barber profiles Lee Hamilton, leading a probe into the arms scandal


Congressman Lee Hamilton's colleagues on Capitol Hill say he is as straight as
the roads in his home state, Indiana.Stern and grave looking, his bristling grey
hair bordering on an old-fashioned crew-cut, he epitomises the virtues of Middle
America - which makes him the almost inevitable choice to chair the House select
committee investigating the Iran arms scandal.

Over the next nine months, the likely length of the House inquiry, the American
public will come to respect, if not necessarily to love, the meticulous Mr
Hamilton.

Like his fellow Democrat chairing the parallel Senate select committee inquiry,
Senator Daniel Inouye of Hawaii, he will become a nationally-known figure.

In an era where television maketh the politician, Mr Hamilton, 55, has stood out
as someone who avoids playing to the cameras.  He is not given to inflammatory
statements and he puts substance ahead of rhetoric.  "Lee is not a bomb
thrower," says one House aide who has worked closely with him.

Some colleagues on the 15-strong House Committee are more explosive by nature,
such as Representative Henry Hyde, the conservative Republican from Illinois.
Congressman Hamilton will need all his skills to contain the many powerful egos
among those who rush to claim a place on his committee.

Lee Herbert Hamilton will draw on the respect he has built up over more than 20
years in Congress since he was elected in 1964, the year of President Lyndon
Johnson's landslide win over Barry Goldwater.  And here lies the paradox: as a
politician representing a district in very nearly land-locked Indiana, Mr
Hamilton's reputation lies in an area of little or no direct interest to his
constituents: foreign affairs.

His passion goes back to the immediate post Second World War period when, like
many young Americans, he spent time in Europe.  In Congressman Hamilton's case
it was West Germany, where he spent a year (1952-53) at the Goethe University in
Frankfurt.

To pursue foreign affairs so avidly is unusual for a congressman.  A more
natural home would be the Senate since it enjoys the primary constitutional
authority to become involved in foreign policy making.  Yet Mr Hamilton has
never sought to represent his home state in Washington as a senator.

By 1980 Congressman Hamilton had acquired enough of a power base in the House
not to look elsewhere.  He was a senior member of the Foreign Affairs Committee
and, in 1984, he was speaker Tip O'Neill's first choice to become chairman of
the sensitive House Intelligence Committee.

In both capacities, Mr Hamilton has been deeply involved in Congress's scrutiny
of President Ronald Reagan's covert operations, both in Central America and
Angola.

On the House floor and in committee hearings he has fought for the principle
that the executive should keep the legislature informed (something which the
White House signally failed to do during the Iran affair).

"But make no mistake," says one House staff member, "he has supported 95 per
cent of the cover operations."

But Mr Hamilton is opposed to aiding the Contra rebels fighting to overthrow the
leftist Sandinista Government in Nicaragua.  Towards the climax of a passionate
debate last June on whether the House should support President Reagan's request
for Dollars 100 m aid to the Contras, Mr Hamilton proposed an amendment which
would have ended any direct aid.

He knew it would not fly.  But again he wanted to fight for a principle.
Privately, he was disappointed that droves of Democrats backed the president for
fear of being accused of being soft on communism in the run-up to the November
mid-term elections.

Mr Hamilton is equally clear-headed on other foreign issues.  Writing in a
recent edition of Foreign Policy, he criticised the Reagan presidency for
failing to use negotiation and diplomacy in its foreign policy.

"President Ronald Reagan may have restored the image of American power in the
past six years but he has shown far less ability to use that power to shape
international institutions and agreements that can protect and promote US
interests."

In this respect, Mr Hamilton is a critic of the Reagan Administration's
abandonment of the Salt 2 Arms Treaty, the Law of the Sea Treaty, its decision
not to submit to compulsory compliance with the International Court of Justice
and its "unilateral reinterpretation of its obligations under the anti-ballistic
missile (ABM) treaty."

More broadly, Mr Hamilton argues that Mr Reagan has promoted the Contra cause to
the exclusion of more important issues such as the international debt crisis and
its impact on democracy in Latin America.  In his estimation, the economic and
political stability of Mexico is more important to the US than the fate of
Nicaragua.

So Congressman Hamilton is no friend of the Administration.  It would be easy,
too, for him to feel cheated, if not betrayed, by the White House over the
Iran-Contra affair.  But the extent of his personal feeling goes little beyond
what he told a recent newspaper interviewer: "I feel I should have known."

As a politician who pays plenty, some would say excessive, attention to the
legislative process, Congressman Hamilton can be expected to leave little
unexplored in his committee's quest for the truth.  For the White House, seeking
to put the affair behind the president, he could prove a formidable adversary.

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                              14 of 614 DOCUMENTS

                        Financial Times (London,England)

                            January 12, 1987, Monday

US Cautious On Change Of Arms Talks Negotiator

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 416 words


Mr Caspar Weinberger, the US Defence Secretary, yesterday played down the
significance of a reported Soviet decision to appoint a more senior official to
head its arms control delegation in Geneva.  He said evidence of a substantive
change in the Soviet negotiating position would be more important for the arms
talks, which resume on Thursday.

Asked on US television yesterday about reports that Mr Yuli Vorontsov, Soviet
first deputy foreign minister, had been appointed to lead the Soviet delegation
to the arms talks, Mr Weinberger said: "I think the important thing is not the
individual who goes to Geneva but the authority that he has ...  we haven't
anything to indicate that the Soviets are going to be any more tractable or any
more willing to sign deep reductions agreements (covering nuclear missiles) that
are fully verifiable."

The new round of arms talks is thought to be a potentially great significance.
Some experts in US/Soviet relations in Washington believe that the Reagan
Administration is anxious to move the arms control negotiations forward, not
least to deflect attention away from the Iran controversy.

But US arms control officials are stressing that it is Moscow, not Washington,
that must make concessions.  Mr Max Kampelman, the chief US negotiator, said
last week that Moscow would be "making a serious error" if it concluded that the
Iran/Contra affair had weakened the Reagan Administration to the point of making
unwise concessions on arms control.

Like Mr Weinberger yesterday, Mr Kampelman also stressed the continuing US
commitment to the Strategic Defence Initiative.

Asked about another US/Soviet mini-summit such as the one held in Reykjavik,
Iceland, in October, Mr Weinberger yesterday did not rule out the possibility
but made it conditional on "some indication that (the Soviet Union) is ready to
make changes in the position they took there ...  if they have a different
agenda and we know that ahead of time it might be of some value."

Mr Weinberger's comments come in the wake of a New York Times report yesterday
that the State Department has proposed that US arms control negotiators be given
authority to drop the Administration's ban on long range mobile missiles in the
next round of talks.  The newspaper says that the State Department is arguing
that the ban is inconsistent with the Administration's plans to develop two new
kinds of mobile missiles, the Midgetman and the deployment of the MX missile on
railway lines.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            January 16, 1987, Friday

President Refuses Apology On Iran

BYLINE: Our US Editor

SECTION: SECTION I; American News; Pg. 4

LENGTH: 235 words


President Reagan does not intend to apologise to the American people for the
mistakes made by the Administration in the Iran/Contra affair, the White House
said yesterday.

Responding to growing pressure to admit that mistakes had been made, Mr Albert
Brashear, the Deputy White House Press Secretary said "the President has said
mistakes were made (but) he certainly feels no apology is necessary."

Republican and Democratic congressmen have been urging Mr Reagan formally to
take full responsibility for the damage they believe has been done to the
credibility of US foreign policy, to the relationship between Congress and the
Administration and to the foreign policy decision to authorise the Iran arms
sales.

The New York Times reported yesterday that even some staunch conservative
supporters of Mr Reagan are privately urging Mr Reagan to apologise.  On Monday
on the Senate floor Senator William Cohen said Mr Reagan could not "escape
responsiblity" for the situation.

Mr Reagan conceded on December 6 that "the execution of these policies were
flawed and mistakes were made," but this comment, in the passive voice, is
widely seen as falling short of the sort of admission of error by the President
which might help to diffuse criticism of his decisions.

Separately it was announced that Mr Nestor Sanchez, the Defence Department's top
official on Central American affairs is retiring.

LANGUAGE: ENGLISH

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                              16 of 614 DOCUMENTS

                        Financial Times (London,England)

                            January 16, 1987, Friday

Weinberger Praises Reagan Leadership

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 335 words


Mr Caspar Weinberger, the US-Defence Secretary, yesterday praised what he
described as the extraordinary political and economic recovery which the United
States has enjoyed under the leadership of President Reagan.

In a speech at the National Press Club in Washington Mr Weinberger appeared to
associate himself with the vitriolic defence of Mr Reagan launched last month by
Mr Pat Buchanan, the conservative, who is White House communications director.
Mr Weinberger's defence comes amid continuing criticism of Mr Reagan's
management of the presidency as a result of the Iran arms deal affair.

Echoing Mr Buchanan's allegations of disloyalty among the President's friends Mr
Weinberger said "these summer soldiers and sunshine patriots" seem to have
forgotten exactly what and who is largely responsible for the favourable turn in
American politics over the last six years."

His remarks appeared designed in part to try and buttress the President's
position ahead of the forthcoming battles in Congress, and also to underscore
his own loyalty.

"It is remarkable that after all these years Ronald Reagan's leadership is still
grossly underestimated he said.  He added: "You simply do not accomplish by luck
all that America has achieved since 1980."

"We must not allow reasonable political debate over pressing national concerns
to be submerged from view while investigations proceed on the Iran affiar." Mr
Weinberger said: "We must not allow America's remarkable success to be belittled
by those who focus narrowly and only on the Iran controversy."

Meanwhile, the White House responded yesterday to pressure on President Reagan
to apologise to the American people for the mistakes which were made in the
Iran/Contra affair, saying that Mr Reagan had done nothing for which he must
apologise.

Republican and Democratic Congressmen have been urging Mr Reagan formally to
take full responsibility for the damage they believe has been done by his
decision to authorise the Iran arms sales.

LANGUAGE: ENGLISH

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                              17 of 614 DOCUMENTS

                        Financial Times (London,England)

                          January 28, 1987, Wednesday

Polls Show Iran Scandal Dents Reagan's Image

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 400 words


President Ronald Reagan's image as a strong and effective leader has been
undermined by the fallout from the Iran arms deal scandal amid growing concern
about the outlook for the US economy, according to the latest batch of public
opinion polls published yesterday as Mr Reagan prepared his State of the Union
address.

The polls continued to show that a majority of American voters do not support
several of the foreign and domestic policies to which the President attaches
great importance, including his proposals for further increases in defence
spending, support for the Contra rebels in Nicaragua and his proposals to cut
government spending on farm support, student loans and medical aid for the old
and the poor.

Opinion poolls have consistently in recent years shown that the President was
more popular than his policies.  But now, with his popularity waning, and its
effectiveness in question, the political significance of the weak support for
many of his policies is greater.

Polls conducted in the past month by the New York Times/CBS News, by the Wall
Street Journal/NBC News and by the Washington Post/ABC News, all indicate
mounting scepticism about Mr Reagan's ability to achieve the political agenda
which will be outlined in the State of the Union speech.

According to the New York Times/CBS News poll, for example, the erosion of
support for his handling of the job of President which began last autumn when
the Iran/Contra scandal broke has halted.  The mid-January poll showed 52 per
cent of Americans thought he was doing a good job, up from 47 per cent at the
beginning of December but down from 65 per cent a year ago.

But the same poll showed overwhelming scepticism about whether Mr Reagan could
accomplish his goals over the last two years of his presidency, with 71 per cent
saying he could not and only 7 per cent saying he could accomplish a great deal.

In the Wall Street Journal/NBC poll 71 per cent of respondents said the
President was not as fully in charge of his Administration as he should be.

The polls also show mounting concern about the economic outlook with the
ABC/Washington Post poll showing that 38 per cent of Americans believe the
economic outlook is getting worse against only 23 per cent who believe it is
improving, the gloomiest response since January 1983.  In December only 28 per
cent thought economic horizon was darkening.

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                              18 of 614 DOCUMENTS

                        Financial Times (London,England)

                           January 29, 1987, Thursday

Contras Concentrate On Winning The Political War;
America, The State Of The Union

BYLINE: Peter Ford, Managua

SECTION: SECTION I; Pg. 4

LENGTH: 832 words


The dry season has arrived, and with it the Contras.  Slipping across the border
from their camps in Honduras, the Nicaraguan rebels are making their first
serious efforts in over a year to bring the war to the Sandinistas.

But the northern Nicaraguan hills are only one front in the Contra war.More
important still, Contra officials acknowledge, is the Washington front, where
the United Nicaraguan Opposition (UNO) fights for the hearts and minds of
Congressmen.

"We have to win the political war, then the military war comes later," argues Mr
Ernesto Palacios, UNO spokesman in Washington.

The Iran-Contra arms scandal and the recent Congressional elections that gave
the Democrats control of both Houses, have posed an uphill task for Mr Palacios.
But his prospects are not entirely bleak.

Senate opponents of Contra aid say their initial headcount still leaves them two
votes short of victory.  House Democrats are more confident, but no one is
predicting certain defeat for President Reagan's request for another Dollars 105
m for his "freedom fighters" next year.

With uncertainty ruling the Contra's political future in the US, and with
Washington pre-occupied by Irangate, "we can't exert much influence there at the
moment," says Mr Leonardo Somarriba, secretary general of UNO.

Instead, the Contras have turned their attention to some of the issues that are
likely to sway Congressmen when the times comes to vote.

One issue is the question of unity among the various groups of exiles.

Former Sandinista hero Mr Eden Pastora, for example, who defected in 1982 to
form his Democratic Revolutionary Alliance (Arde) refused to join UNO on the
grounds that it included people such as Enrique Bermudez, once a National Guard
colonel, and now head of the Contras' largest military group, the Nicaraguan
Democratic Force (FDN).

But by lining up Arturo Cruz and Alfonso Robelo - both of whom had served in
Nicaragua's post-revolutionary government - alongside FDN leader Adolfo Calero -
UNO did help dispel the Contra's ragged image.

However, Mr Cruz and Mr Robelo soon found out that, for all their backing from
the US State Department, real power still lay with the FDN.  The result is that,
while UNO presents the Contras' public face to the world, the FDN remains firmly
in control of operations in Honduras.

But moves are afoot now, sources close to the rebel leadership say, to give the
Contras the sort of political coherence and credibility they need if they are to
attract real support from Nicaraguans both at home and in exile.

The first tentative step in this direction was taken earlier this month by
leaders of UNO and of the Southern Opposition Block (Bos), a Social Democratic
group which has maintained its independence from UNO while co-ordinating
political work.

The two organisations jointly released the Contras' clearest statement yet of
their political outlook.

The document, while by no means a detailed government strategy, sets out a
fundamentally conservative position, offering "an authentically democratic
regime forming an integral part of the Western world," which stresses political
pluralism, the family, and private property as "an expression of natural law."

The state would be allowed a "regulatory role" in economic affairs, but "the
economic regime will be oriented towards the establishment of a market economy,"
the document says.  Sandinista reforms and social organisations would be
dismantled and the Sandinista Front would be excluded from the planned
provisional government.

But many in the US Congress are sceptical about the Contras' viability as a
military force after 18 months in which the rebels have launched scarcely any
serious attacks.

A force of some 1,000 to 2,000 FDN troops have managed to maintain themselves in
Central Nicaragua, but the vast bulk of the FDN, some 10,000 men, have been
bottled up in their Honduran base camps by Sandinista troops for over a year.

Only now, as the official US military aid begins to flow, are they making their
way into Nicaragua.  Some 3,500 guerrillas have infiltrated across the border
over the past month, according to FDN officials, though Sandinista estimates are
far lower, at around 1,500 men.

Rebel leaders say they have no intention of launching spectacular but militarily
risky operations and instead plan simply to expand their presence inside
Nicaragua.  But if they are to convince the US Congress that they are worth
continued support, Congressional staffers warn, they will have to do more than
that.

The least stringent measures of success, offered by Contra sympathisers as
realistic yardsticks, call for an "internal front," attacks on significant
Sandinista military installations and the co-ordination of several operations.

It may be, Western military observers here say, that the US training that some
rebel field commanders are now undergoing will give them those sorts of
capabilities.  But so far, they add, there is no sign of them.

LANGUAGE: ENGLISH

GRAPHIC: Map

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                        Financial Times (London,England)

                            February 2, 1987, Monday

The Monday Page;
The Right Stuff

BYLINE: Lionel Barber

SECTION: SECTION I; Pg. 10

LENGTH: 1733 words

HIGHLIGHT:
Patrick Buchanan, President Reagan's Director of Communications, talks to Lionel
Barber


Personal File

1938 Born in Washington DC

1961 Honours degree in English at Georgetown University

1962 Joins St Louis Globe-Democrat newspaper

1966 Joins Richard Nixon's Presidential campaign

1969 White House speech writer for Richard Nixon and Spiro Agnew

1973 Gives evidence to Watergate Committee

1975 Becomes syndicated columnist and broadcaster

1985 Appointed President Reagan's White House communications chief

The Reagan Administration has circled the wagons and from his windowless
basement office in the White House, Patrick Joseph Buchanan is returning fire.

As President Ronald Reagan's director of communications, Mr Buchanan is in the
front line of the battle for public opinion on the Iran arms scandal.  It is a
familiar slot.  Only 13 years ago, Mr Buchanan, then a fresh-faced speech
writer, found himself in the trenches with another embattled president, Richard
Nixon.

But Pat Buchanan is more than a mere wordsmith with a flair for taking the
offensive.  Until his move to the White House, he was a successful syndicated
columnist and TV personality earning more than 400,000 dollars a year, and for
the past two years he has been one of Mr Reagan's closest advisers.

He is a bare-knuckles conservative, and Irish-American from a family of nine who
brings an almost religious fervour to his political thought and expression.  He
is proud to be labelled an ideologue, prouder still to be called the
standard-bearer for the American New Right, the conservative increment which
puts military might and moral strength at the top of its agenda.

It was only 10 days ago that Mr Buchanan, after much personal agonising, dropped
out of contention for the Republican Party's presidential nomination in 1988.
Experienced commentators reckoned he was a better bet than the conservative
camp's other front-runners, Congressman Jack Kemp of New York and the Rev. Pat
Robertson, the evangelist with his own TV talk show.  Some even believed that
about 10 per cent of the Republican Party's vote was there for Mr Buchanan's
taking - enough to give him an important influence over the choice of the
eventual candidate and the party platform.

By choosing not to run, Mr Buchanan has avoided splitting the Republican right -
and left open his options for 1992."It would have been like Pickett's charge,"
he says, referring to the final bloody and ultimately futile Confederate effort
to win the key Civil War battle of Gettysburg in 1863, "but the support was
there."

What does he make of the present presidential crisis?  What message does he have
for those who watch fearfully as the scandal is dissected by congressional
committees, the media and the inevitable Grand Jury?

First, a warning: "This is no Watergate," declares Mr Buchanan.  He says, in
effect, that there is no smoking gun and no cover-up of wrongdoing instigated by
White House staff which goes right to the top.  The President's claim that he
knew nothing of the diversion of profits from arms sales to Iran to the Contra
rebels in Nicaragua is a credible defence in Mr Buchanan's view.

Furthermore, the way the Reagan White House is handling the Iran scandal is very
different from the way in which the Nixon presidency treated Watergate.

"The job of answering charges and allegations about the Iran affair - unlike the
Nixon White House where we were all involved in that constantly - does not
exist.  I don't even read the details of these strange-named people involved in
this Iran thing," he says.

Above all, the atmosphere in the US is different.  "The Nixon thing really was a
fight to the finish."

When the Senate Select Watergate Committee first turned its attention in early
1973 to the "dirty tricks" aspect of the affair, it was Mr Buchanan's testimony
that broke its summer-long momentum.

He argued that most of the dirty tricks were standard political fare - and many
veteran senators on the committee privately agreed.  "It was a real blow-out and
an unmitigated disaster," said one.  "He made us look like fools."

There is little doubt that Mr Buchanan would dearly like to trade punches over
Iran-gate, too.  But more sober counsel has prevailed and Mr Reagan, while not
offering an outright apology, has made every effort to appear to co-operate with
Congress and the three-strong Tower Commission investigating the working of the
National Security Council.

In Mr Buchanan's view there may be legitimate policy debate about the decision
to sell arms to Iran.  Equally, there is a legitimate probe into whether profits
were diverted to the Contra rebels in defiance of a congressional ban.  But this
should not obscure what Mr Buchanan - the ideologue - views as the core issue:
the power struggle between the left and right in the US which has erupted as a
result of the current crisis.

In a recent column in the Washington Post (not cleared by the White House chief
of staff, Mr Donald Regan), Mr Buchanan wrote: "What liberalism and the left
have in mind is the second ruination of a Republican presidency."

The present struggle - by this definition - is between the conservatives and
traditionalists led by Mr Ronald Reagan on one side and the bulk of Democrats,
liberals in the bureaucracy, Washington press corps and the academic
establishment on the other.  "At bottom," says Mr Buchanan, "what you are now
seeing is a battle for the American political agenda."

There is every suggestion then that the current crisis is the prologue to the
1988 campaign.  But Mr Buchanan says it is also symptomatic of deep divisions in
American society, going back to the mid-sixties when the nation was split over
civil rights and the Vietnam war.

It is more than coincidence that Mr Buchanan's chronology of post-Second World
War political conflict begins with the emergence of the conservatives as a
dominant force within the Republican Party.  For it was in 1964 that Senator
Barry Goldwater of Arizona, aided by conservative activists, wrested control of
the party from the Republican establishment.

In the event, it led to Mr Goldwater's own Pickett's Charge against President
Lyndon Johnson.  But the signal had gone out to the conservatives in the
Republican Party; they, too, could be contenders.  In the longer term, the way
had been prepared for the successful presidential nomination of Ronald Reagan.

Once the White House had been stormed and a two-term presidency for Ronald
Reagan had been achieved, one might think the conservatives in the Republican
Party should pause for breath.  Not a bit, for in Mr Buchanan's words: "The
greatest vacuum in American politics is to the right of Ronald Reagan."

By this argument, Mr Reagan stands at the centre of the American political
spectrum: a great conservative leader elected by massive popular support who has
achieved much in his two terms, particularly to restore America's military
pre-eminence.  On the domestic front, Mr Reagan has left chunks of the
conservative agenda untouched.  Key items include anti-abortion legislation and
the right - currently denied because of the separation of church and state - to
hold prayers in schools.

Mr Buchanan believes there is ample scope for an ultra-conservative Republican
to pick up votes from patriotic and nationalistic elements in the Democratic
Party.

Allied with the international right from President Botha of South Africa to
President Pinochet of Chile, he embodies a virulent anti-communism, a Manichean
view of the world where military metaphors are mixed with imagery of god and the
devil.

Speaking of Dr Martin Luther King, the black civil rights leader, Mr Buchanan
once said, urging President Nixon not to visit his widow on the first
anniversary of his assassination: " ...  it would outrage many, many people who
believe Dr King was a fraud and perhaps a demagogue ...  others consider him the
devil incarnate."

During the impassioned debate in Congress in 1985 over Mr Reagan's request for
Contra aid, Mr Buchanan said: "With the vote on Contra aid, the Democrat Party
will reveal whether it stands with Ronald Reagan and the Resistance - or Daniel
Ortega and the Communists."

In the event, a vote the following year restored the flow of weapons to the
Contras - a victory which Mr Buchanan counts among his greatest in the current
Administration.

Therein lies the potency of Pat Buchanan.  He has reinforced the President's own
judgments in matters of foreign policy, notably in the unfailing support for
anti-Marxist movements in Africa, Afghanistan and Central America.That, in turn,
has encouraged the President to push, successfully, for his agenda on Capitol
Hill.

The question is whether the Iran arms scandal and the new Democrat majority in
Congress, have shifted the mood decisively to the President's disadvantage.  Mr
Buchanan believes the next two years will be difficult but not impossible,
pointing out that Richard Nixon won 49 states in 1972 despite Democrat
majorities in Congress and the agony of the Vietnam War.

"The President can be an extraordinarily effective leader in foreign policy, in
defence policy, in using the bully pulpit, in vetoing legislation, in shaping
the policy debate, in appointing people to the judiciary.

"The Republican Party has succeeded to the degree it has because of one man -
Ronald Reagan.  If the Republican Party feels that it can discard ideas on the
basis of its superior fund-raising ability, its superior personalities, and its
superior technologies, then we will be back where we were ...  and we will
belong there."

This, then, is the crusade.  The question is where best Mr Buchanan can lead it.
Inside the White House he has constantly felt confined, not least because of the
tight leash of Mr Donald Regan.  It is no secret that Mr Regan would have been
happy to see Mr Buchanan leave the White House to join the Republican campaign.
Now he has chosen not to run, his position is, at best, precarious.

He would like to have been offered the job of Nato Ambassador, but the State
Department, remembering his bitter attacks over its South Africa policy, vetoed
the appointment.  "I liked the idea of appearing on 1,000 panels and 15
different TV stations arguing foreign policy," he says with a mischievous smile.

A more likely move is back into television where his instant punditry and
adversarial style make him a natural for the small screen.  And then there is
always 1992.

LANGUAGE: ENGLISH

GRAPHIC: Picture

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                        Financial Times (London,England)

                           February 3, 1987, Tuesday

Insider Nominated To Head CIA As Casey Resigns

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 438 words


Mr William Casey, the 73-year-old director of the Central Intelligence Agency
(CIA), has resigned and his deputy Mr Robert Gates, a career officer who has
served with the CIA since 1966, has been nominated as his successor.

Mr Casey's departure was widely forecast since he underwent surgery last month
to remove a cancerous brain tumour.  After initial optimistic reports, it was
disclosed that he was suffering speech impediments and had little chance of
returning to work.

Mr Casey is a key figure in the Iran arms scandal whose testimony is considered
crucial to discovering who knew about the secret diversion of funds from US arms
sales to Iran to Contra rebels in Nicaragua.  His testimony to Congress so far
has been attacked for inconsistencies.

At Mr Casey's direction, the CIA helped to organise a private network of arms
dealers and former CIA operatives to supply the Contras with military aid during
a ban by Congress in 1984.  Lt Col Oliver North, the White House staffer sacked
for his role in the Iran affair, managed the operation.

The CIA's role in the Iran affair - and the resulting flood of embarrassing
disclosures - has left the Agency demoralised and rudderless, according to
Washington analysts.  This contrasts with its revival under Mr Casey's
leadership since 1981 when, as a close friend and campaign adviser of Mr Ronald
Reagan, the President, he was appointed CIA director.

Mr Casey boosted the Agency's budget, encouraged undercover operations to help
anti-Marist insurgents in Afghanistan and Angola, and helped restore morale
after the purges of the post Nixon era when the Agency's excesses were exposed
by Congress and the media.

But under Mr Casey the Agency also suffered heavy setbacks particularly in its
efforts to match the KGB in espionage coups.A leading Soviet defector - Mr
Vitaly Yurchenko - was allowed to slip away from his CIA guards in Washington
and "redefect" to Moscow.

A CIA mole - Mr Edward Lee Howard - disappeared while under surveillance at his
New Mexico home in September 1985 and was later said to have betrayed America's
spy network in the Soviet Union.

Critics say Mr Casey was a political appointment who lost a good opportunity to
build solid political support for the Agency's activities on Capitol Hill.  He
regularly antagonised Congress by not informing the select group of lawmakers
who oversee the CIA of operations as required by Congressional oversight laws.

The CIA sponsored mining of Nicaragua's harbours in 1984 is a good example.  Mr
Casey also argued strongly that Congress should not be informed of secret US
arms sales to Iran.

LANGUAGE: ENGLISH

GRAPHIC: Picture Casey, too ill

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                        Financial Times (London,England)

                           February 3, 1987, Tuesday

Reagan To Surrender Iran Arms Affair Notes

BYLINE: Our Washington Correspondent

SECTION: SECTION I; American News; Pg. 4

LENGTH: 196 words


President Reagan is willing to surrender relevant excerpts from his personal
notes to congressional committees investigating the Iran arms scandal, the White
House said yesterday.

"The President wants to get to the bottom of the matter and fix what went
wrong," Mr Martin Fitzwater, Mr Reagan's new chief spokesman, said in a written
statement.

Earlier Mr Fitzwater conceded that handwritten notes kept by the President
contained details of the Iran-Contra affair, but he said the White House
believed the scandal could be investigated without them.

The two select committees have yet to request the notes but one panel member has
suggested they should be examined as part of the overall inquiry.

Mr Fitzwater said the President had used the notes to refresh his memory before
giving evidence to the Tower Commission, the three-strong blue ribbon committee
set up by the President to examine the working of the National Security Council.

The existence of Mr Reagan's private notes was revealed by Mr Donald Regan,
White House Chief of Staff, in testimony to Congress.  The notes were apparently
intended to serve as the basis for a future presidential memoir.

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                        Financial Times (London,England)

                            February 6, 1987, Friday

Reagan Agrees To More Evidence On Iran Affair

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 348 words


President Ronald Reagan has agreed to give further evidence to the commission
investigating the Iran-Contra affair, and will also hand over relevant personal
notes, the White House said yesterday.

White House Spokesman Mr Marlin Fitzwater said Mr Reagan would hold a second
meeting with the commission, headed by Senator John Tower, on February 11.

Mr Reagan's conciliatory gesture came as pressure mounted among Republicans for
Congress to grant limited immunity from prosecution to two key witnesses, Vice
Admiral John Poindexter, former National Security Adviser, and Lt Col Oliver
North, the White House aide sacked for his role in the scandal.

Two Republican members of the House of Representatives select committee
investigating the affair said immunity would speed up the inquiry.  The men have
refused to testify before Congress, citing their Fifth Amendment rights against
self-incrimination.

Mr Lawrence Walsh, the court appointed independent counsel, believes limited
immunity could jeopardise future criminal charges.

The two Republican members of the committee, Mr Henry Hyde and Mr William
Broomfield, are conservatives.  They feel a lengthy investigation is against the
national interest and damaging to President Reagan.

The House committee has questioned several potential witnesses including the
former deputy director of the Central Intelligence Agency, Mr John McMahon, an
employee of Mr Adnan Khashoggi, the Saudi billionaire arms dealer, and Mr Eugene
Hasenfus, the US airman shot down over Nicaragua last year while on a secret
re-supply mission for the Contra rebels.

It has, however, not been able to interview a key figure in the scandal -
retired Air Force Major General Richard Secord.  Last December, Mr Secord cited
his Fifth Amendment rights when called to give evidence to the Senate
Intelligence Committee on his role in the affair.

Mr Secord has been reported to have had contacts with Lt-Col North through his
involvement in a private undercover network to supply the Contras with military
aid during a congressional ban in 1984-85.

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                        Financial Times (London,England)

                           February 13, 1987, Friday

Shultz In Plea For Aid To Rebels

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 422 words


Mr George Shultz, the US Secretary of State, appealed for continued
congressional support for the "Contra" rebels in Nicaragua yesterday, warning
that abandonment of the Contras would increase the risk of direct US military
intervention.

"By supporting those Nicaraguans now who are fighting for their liberty we may
avoid direct military involvement by the US," he said in a speech in New
Orleans.

Mr Shultz's comments came before a key vote in Congress next week on a bill to
cut off the Dollars 40 m final instalment of the Dollars 100 m Contra aid
package approved last year.  The vote is expected to reflect mounting opposition
to President Reagan's Central American policy and declining support for the
rebels in Congress in the wake of the Iran/Contra arms deal scandal.

Few, however, anticipate that the Dollars 40 m will be withheld.  Even if
Congress approved the bill, its supporters do not expect to muster the
two-thirds majority needed to override the presidential veto.

By continuing to put aid to the Contras at the centre of its policy in central
America the White House may be backing a policy which is doomed to failure.
Contra aid does not enjoy strong support in Congress.  If Democratically
controlled Congress finally votes down a new aid package later this year it will
be dealing a devastating blow to Mr Reagan's policy in the region.

Mr Martin Fitzwater, the White House Spokesman, vigorously denied yesterday that
the Administration was planning to delay asking Congress for the Dollars 105 m
of aid for the Contras included in the 1988 budget.  "The request is there, we
intend to proceed," he said.

But some Administration officials, while arguing that the White House was not
delaying a request because no firm date had been laid down for pressing Congress
on the issue, conceded that the Administration would not be pushing the new
Contra aid package until the late summer.

The political weakness of the President as the Iran affair rumbles on, the
absence of major rebel military victories, reports of human rights violations in
the field and the increasing reluctance of Nicaragua's neighbours to provide
shelter for the rebels are all contributing to the increasing scepticism on
Capitol Hill over the Administration's policy in Central America.

The threat to Contra funding was underscored yesterday by Admiral William Crowe,
the Chairman of the Joint Chiefs of Staff, who said bluntly that the rebels must
unite and change their tactics or face losing US financial support.

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                        Financial Times (London,England)

                          February 14, 1987, Saturday

Reagan Faces Fresh Iran Arms Upset

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Back Page; Pg. 18

LENGTH: 543 words


The White House is bracing itself for another damaging round of disclosures
about Iran/Contra arms deals when the Presidential Commission headed by former
Republican Senator John Tower publishes a declassified version of its report.
The document will be delivered to President Reagan later this month.

This follows disclosures that the commission has stumbled upon a mass of new
information, filed on computer tapes, which White House participants in the arms
dealings did not know were running.  Mr Marlin Fitzwater, the White House
spokesman, said yesterday: "I think it is going to be a critical report, a tough
report, the tougher the better ...  we will take our lumps."

The political fallout from the Iran affair was now prompted Vice-President
George Bush to put a little more distance between himself and President Reagan,
to try to limit the damage the scandal has done to his presidential ambitions.
Polls suggest that the Vice-President is confronting a perplexing dilemma.

On the one hand, many of those who support his prospective presidential
candidacy do so because of his position as natural heir to the Reagan legacy.
It is precisely this link, however, which Mr Bush himself has conceded in public
is politically damaging, because of the Iran scandal.

In Michigan on Thursday, Mr Bush spoke of "associational guilt" in connection
with the Iran affair.  At the same time, he began to tread delicately down the
path taken by Mr George Shultz, the Secretary of State.

Mr Bush indicated that he had "reservations" about the Iran arms dealings and
added that he expected that, as a result of expressing his views, "there will be
some contradictions, some friction (with Mr Reagan) but I think the President
will understand."

The White House confirmed yesterday that the Tower commission had asked for
computer material, disks and national security directives.  These will provide
additional details on the Iran dealings, and the discovery of them led the
commission to ask for an extra week in which to prepare its report.

Commission officials are sifting through thousands of messages which, according
to an account in yesterday's Wall Street Journal, consist of recorded
conversations between White House National Security Council staff.  These
remained in a central computer memory bank inside the White House without the
knowledge of the authors, who thought they had deleted them.

Administration officials said the tapes included messages sent between Lt Col
Oliver North and former National Security Council Adviser John Poindexter.

Separately, ABC News reported that some of the messages dealt with the
activities of private groups who funded the Contras.  It added that one wealthy
individual, Mr Carl Channell, brought in a group of big donors to meet President
Reagan and Mr Donald Regan, the White House Chief of Staff.

The Washington Post reported that the Tower commission is investigating whether
the White House officials sought initially last November to cover up the
Iran/Contra arms dealings.

The Post said the Tower commission had evidence that Mr William Casey, the
former director of the Central Intelligence Agency, was much more deeply
implicated in the affair than had been previously disclosed.

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                        Financial Times (London,England)

                           February 17, 1987, Tuesday

Secrets Of Irangate 'Stored In Computer'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 322 words


The Tower Commission investigating the Iran arms scandal has uncovered sensitive
material about the affair stored in a central computer in the White House, it
was reported yesterday.

In an eerie evocation of the Watergate tapes, Newsweek magazine said a
computerised message system known as "PROFS" had recorded an avalanche of
material showing that senior Administration officials, including Mr William
Casey, former head of the CIA, and the White House Chief of Staff, Mr Donald
Regan, were more deeply involved than previously assumed.

The Tower Commission last week asked for a seven-day extention of its February
19 deadline following what is described as the discovery of "new material."

President Reagan, who appointed the three-strong panel, headed by the former
conservative senator from Texas, Mr John Tower, to investigate the workings of
the National Security Council, granted the request.

The existence of the council's computer system was disclosed by the Washington
Post's Watergate reporter, Mr Bob Woodward, but the White House dismissed the
story.

Newsweek said yesterday that many council staff thought their messages had been
erased, but a record was kept in a central memory bank.

The chief disclosures appear to be that Mr Reagan was aware of Lt-Col Oliver
North's private fund-raising activities for the Contra rebels in Nicaragua
during Congress's ban on direct and indirect US aid in 1984-85.

Vice-Admiral John Poindexter, President Reagan's National Security Adviser, who
resigned last year over the affair, is also reported to have spoken, through the
computer, regularly to Lt Col North, sacked for diverting profits from secret US
arms sales to Iran to the Contras.  The material also apparently documents many
conversations between Lt Col North and Mr Casey.

Mr Herb Hetu, of the Tower Commission, said yesterday that no evidence of
criminal activity had been discovered by the panel.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          February 21, 1987, Saturday

Reagan 'Unaware Of Arms Cover-Up'

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Back Page; Pg. 18

LENGTH: 480 words


President Ronald Reagan was not aware of any attempt last November to conceal
the depth of his involvement in the decision to ship US arms to Iran in a
diplomatic initiative aimed partly to secure the release of American hostages
held in Beirut, the White House said yesterday.

The statement from Mr Martin Fitzwatler, the White House spokesman, came in the
midst of another spate of embarrassing disclosures about the Iran Contra affair,
including allegations that presidential aides had tried to cover up the extent
of the President's involvement in the decision-making process as reports of the
deal surfaced.

The allegations came amid mounting tension in Washington ahead of the release,
perhaps as soon as next week, of a report on the role of the National Security
Council, the President's advisory committee on security matters.  The report is
being prepared by a commission appointed by Mr Reagan late last year, headed by
former Senator John Tower.

Administration officials who have been surprised by the determination with which
the Tower commission has pursued its inquiries have already conceded that the
commission report promises to provide a much more hard-hittng analysis of the
Iran affair than had been expected.

The New York Times reported yesterday that, in an interview on Thursday, Mr
Robert McFarlane, President Reagan's former National Security adviser who is in
hospital after what police say was a suicide attempt, told the commission he had
taken part in an effort by White House aides to hide President Reagan's key role
in the initiation of the Iran arms deal in 1985.

The story and Mr McFarlane's statement followed reports earlier in the week
suggesting that President Reagan had altered his own version of the initial
stages of the arms deal.

According to these, Mr Reagan originally told the Tower commission he had
approved in advance the first shipment of arms to Iran in August 1985, as Mr
McFarlane had testified.  Then, in a second interview with the commission, Mr
Reagan modified his statement to accord with that of Mr Donald Regan, the White
House Chief of Staff, who had testified that Mr Reagan approved the deal only
after the first arms shipment.

In another disclosure the Washington Post reported yesterday that in the summer
of 1985 the State Department sought to head off a White House-sponsored
initiative aimed at trying to persuade Egypt to join the US in an attack on
Libya.

The report said that, as over Iran policy, the Adminstration was bitterly
divided on the proposal.

Separately, yesterday Representative Jack Kemp, the influential conservative
Republican member of Congress who is seeking the party's presidential
nomination, sought to weaken the position of Mr George Shultz, the Secretary of
State, and at the same time polish his conservative credentials - by calling for
Mr Shultz's resignation.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                           February 23, 1987, Monday

Testing Week Ahead For Reagan

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Back Page; Pg. 40

LENGTH: 358 words


President Ronald Reagan's ability to stem the steady erosion in his capacity to
provide effective leadership will be tested again this week with the expected
publication of a damaging report into the Iran arms scandal.

He also faces the probable resignation of Mr Donald Regan, the White House Chief
of Staff, who has been feuding with Mrs Nancy Reagan.

White House officials have conceded that the report of the Tower Commission
appointed by Mr Reagan last November to look into the operations of the National
Security Council, the President's advisory committee on security matters, in the
wake of the Iran arms dealings, will be highly critical of the NSC.

There is also widespread speculation in Washington that, although the
Commission's fiercest criticism will be levelled at Admiral John Poindexter, the
former National Security Adviser, and his assistant, Lt Col Oliver North,
others, including Mr Regan, will be singled out for blame.

If this proves to be the case, Mr Regan, widely seen as having failed the
President and the country by clinging to his office despite calls to quit will
find it impossible to stay.

There has been damaging new allegations about the Iran/Contra arms scandal, and
revelations about the efforts of inexperienced White House officials to shape US
foreign policy through covert operations.  Last week the White House did not
deny allegations of an official cover-up, saying only that the President was not
aware of any cover-up attempt.

Senator Robert Byrd, the Democratic majority leader, accused unnamed White House
officials on Saturday of lying.

The New York Times reported yesterday that the real objective of last year's air
strike against Libya was not the aim of striking at guerrilla and military
facilities, but to assassinate Col Muammar Gaddafi, the Libyan leader.

The Washington Post also reported yesterday that Lt Col North, fired for his
part in the Iran arms dealings and alleged transfer of profits from the arms
sales to the Contra rebels in Nicaragua, sought to destroy documents and
internal messages just before Justice Department officials launched an
investigation.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          February 25, 1987, Wednesday

Fresh Plea To Swiss On Iran Arms Affair

BYLINE: William Dullforce, Geneva

SECTION: SECTION I; American News; Pg. 4

LENGTH: 324 words


US authorities have filed two new requests with the Swiss Government for
information to help their investigation into the Iran-Contra affair, the Swiss
Justice Ministry said yesterday.

The requests bring to more than 20 the number of companies and people, on which
the US is seeking information from Switzerland in connection with the transfer
of funds from US arms sales to Iran to Contra rebels fighting the Nicaraguan
government.

In December the federal police office ordered the freezing of two bank accounts
after receiving two earlier US request for legal help.

One account, in the name of Lake Resources, a company mentioned in US newspaper
reports, was with the Geneva branch of Credit Suisse.  The US Justice Department
linked the name of Lt Col Oliver North, the US marine officer at the centre of
the Iran-Contra affair, with one account.

No further accounts have been blocked after the receipt of the new US requests.

In one request filed in January US officials sought information on accounts
administered on behalf of 16 named clients by a Geneva company suspected of
having acted as an intermediary in the delivery of the arms to Iran.

A company in Florida, which is alleged to have received the funds from the arms
sales and used them to finance Contra operations, is the object of the latest US
request filed earlier this month.  In connection with this company US officials
want information about accounts held by four other concerns.

Six appeals against the earlier decision of the federal police office to meet
the US call for legal help have been filed by people named as account holders.

People affected by the new requests have 10 days to file appeals while those
concerned in the earlier US demands for information have had the deadline for
their appeals extended, after the arrival of the new requests.

The federal police office does not expect to decide on the appeals until towards
the end of March.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          February 26, 1987, Thursday

Judge Blocks Attempt To Indict Former Reagan Aide

BYLINE: Nancy Dunne, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 208 words


Attorneys for Mr Michael Deaver, a close friend and former aide of President
Reagan, yesterday managed to stall, at least temporarily, legal proceedings
against their client by raising "substantial questions" about the
constitutionality of the 1978 law allowing special prosecutor investigations.

It was the second time in two days that the law was challenged. Attorneys for Lt
Col Oliver North, the fired national security council aide, filed a similar suit
on Tuesday in an attempt to block the criminal investigation of the Iran-Contra
arms scandal.

After a nine months investigation of Mr Deaver's private lobbying practice, the
special prosecutor appointed to investigate charges against him had planned to
ask a grand jury to indict him for lying to Congress and another grand jury.

However, Mr Deaver's attorneys convinced a federal judge to grant a temporary
restraining order.  A hearing was set for March 11 for a consideration of the
legal challenge.

Col North's lawyers maintained yesterday that the law under which the special
prosecutor was appointed was unconstitutional because separation of Government
powers gives the President the sole authority to appoint prosecutors in cases
involving offences against the US.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          February 26, 1987, Thursday

A Hollow Feeling At The Heart Of Things

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; Editorial; Pg. 20

LENGTH: 1955 words

HIGHLIGHT:
On the day the Tower Commission reports, Stewart Fleming in Washington assesses
Ronald Reagan's chances of rescuing his beleaguered presidency


Ronald Reagan, so his critics in Washington are saying, is the first president
of the post Reagan era.

It is a cruel jibe and unfair to Mr Reagan's successor.  It is difficult to
imagine that the next president could be in as much danger of becoming
irrelevant to the political life of the nation as the current incumbent.  The
events of the past few days have underscored just how low the President's
fortunes have sunk.  Last week millions of Americans tuned in to America ABC's
tedious fictional account of a Soviet takeover of the US, including the
installation of a puppet president.

But the truly gripping drama has been provided by the news media's portrayal of
turmoil within the White House, allegations of an attempt last November to cover
up Mr Reagan's role in the genesis of the Iran arms scandal and, above all, the
visible passivity of the President in the face of a crisis which is weakening
the office as well as the man.

In the midst of a contretemps between Mr Donald Regan, his Chief of Staff, and
Mrs Nancy Reagan, his wife, the President (with Mr Regan watching) told a
television reporter in the White House that it was up to Mr Regan to decide
whether he should resign.  Moments later Mr Regan was pictured indicating that
it was up to the President to make the call.

The Chief of Staff's departure is now expected within days, not weeks.

He will leave a White House rocked by continuing leaks about the Iran
controversy.  The scathing analysis of the Reagan Administration's foreign
policy making, due to be unveiled today in the report of the Tower Commission,
can scarcely be expected to calm the waters.

The bipartisan commission was appointed by President Reagan last November.
Under the chairmanship of Mr John Tower, a former conservative Republican
senator, it has been looking into the role of the National Security Council and
the background to the Iran affair.

The commission, which includes Mr Edmund Muskie, former Secretary of State, and
Mr Brent Scowcroft, former national security adviser in the Ford Administration,
has pursued its inquiries with rather more vigour than the President's advisers
had anticipated.

Mr Reagan has been interviewed twice - the only reports he has given of the Iran
affair to an independent inquiry.  He gave conflicting accounts of whether or
not he authorised the first arms shipments to Iran in advance.

Now Mr Reagan is saying he cannot remember whether or not he gave advance
approval - a statement designed to defuse criticism of himself, but which will
do little to reassure that half of the American people who believe he has lied
to them about the Iran controversy.

The Tower Commission Report is expected to contain if not a complete account of
the Iran-Contras arms scandal, at least the most authoritative summary of what
is known so far.

More importantly, it is expected to include a highly critical assessment of how
foreign policy making in the Reagan Administration was distorted by covert
operations run out of the National Security Council at the White House by Lt Col
Oliver North.  As a result high ranking officials, such as Secretary of State Mr
George Shultz, lost the initiative in policy formulation in key areas such as
the Middle East to the NSC's right-winters - who were long on ideology but short
on foreign policy experience.

On Monday, a group of 11 of Mr Reagan's top advisers, including Mr James Baker,
the Treasury Secretary, and former senator Mr Paul Laxalt, one of Mr Reagan's
closest political friends, met the President to plan his response to the Tower
Commission report.

It seems clear that a critical juncture has been reached in the Reagan
presidency.  He may be facing his last opportunity to halt the relentless
downward spiral in his political fortunes since the autumn.  The decisions he
takes, on the Tower report and on who should be White House Chief of Staff for
his final two years; will be crucial to the outcome.

The sense of a White House in disarray is deeply disturbing to administration
officials.

Take, for example, the judgment offered earlier this month, in private, by one
cabinet level official.  Asked how he was functioning, given the White House's
political problems, he said that he was fortunate.  He had been in Washington as
a member of the Nixon Administration when the Watergate scandal engulfed and
paralysed the White House.

That experience, he said, was standing him in good stead.  It had taught him the
lesson that at times such as this he had to rely on his own credibility and
relationships to achieve his political goals.  He could not expect to run for
support to a White House preoccupied with other things.

This gives something of a reassuring perspective on how individuals can operate
in the Administration today.  But a more objective examination of how this
isolationist approach to the job of government works in practice points to a
less encouraging picture.

Some officials, who have managed to escape the maelstrom of the Iran scandal,
have been able to press ahead with political initiatives and decisions of
consequence operating, as it were, from independent fiefdoms.  It is
significant, for example, that in the field of economic policy-making the
stature of Treasury Secretary Baker has not been diminished by any reports
linking him to the Iran affair.

Last weekend, Mr Baker travelled to Paris with the independent chairman of the
Federal Reserve Board, Mr Paul Volcker, and returned with an understanding -
less far reaching than some had anticipated perhaps, but more solid than the
financial markets had feared - about how the major industrial countries should
set about stabilising the value of the dollar.

Elsewhere in the Administration, old friendships have been tested by the Iran
scandal.  Longstanding tensions have erupted as Mr Reagan's traditional
reluctance to resolve disputes between his key officials has been exacerbated.

One of Washington's elder statesmen, a former cabinet official, says: "Shultz
and Regan don't speak, Shultz and (defence secretary) Weinberger disagree
violently." He describes the appointment of Mr Frank Carlucci to the post of
National Security Advisor as "the one positive thing" that has taken place at
the White House in recent months.

It has been between Mr Weinberger and Mr Shultz, old rivals on how to deal with
Moscow, that the most visible tensions have arisen.  With Mr Shultz weakened by
his handling of the Iran affair, an emboldened Mr Weinberger has been pressing
for a decision on the early deployment of an (as yet non-existent) first phase
of the strategic defence initiative, which many in Washington and Europe believe
could doom the Geneva arms control talks.

Mr Shultz, who would like to conclude an arms control agreement, has succeeded
in fending off early deployment.  But he appears to have embraced a
reinterpretation of the 1972 Anti-Ballistic Missile Treaty, which arms control
advocates argue will also kill off prospects for an agreement with Moscow.

Mr Weinberger's stance is comforting to those who believe that Washington needs
to exert more pressure on Moscow at the bargaining table.  It also reassures
conservative Republican supporters of Mr Reagan, who are watching the
ideological struggle for influence in the Administration with an eye on the 1988
election.

But, if those who argue that Mr Weinberger's policies spell death to progress in
arms talks are right, then Mr Reagan will pay a price.

He will not have a popular high profile foreign policy agenda to offer to help
distract attention from his domestic political travails.  He will also have
widened the battlefront on US strategic and defence policy in a Congress
controlled by Democrats.  They already sense that, later this year, they will be
able to force Mr Reagan to abandon his cherished belligerent approach to dealing
with the Sandinista Government in Nicaragua.

With much of his political strength squandered and challenges facing him on so
many different fronts, the President cannot hope to reverse his decline - let
alone improve his standing - without exerting powers of leadership and without
the help of able advisers.

This is particularly true of Mr Reagan's White House with its paradox of a
passive president who retains ultimate decision-making authority on major
issues, while delegating the formulation of detailed policies to a circle of
close advisers.

Partly because the Reagan Administration - with its ideological imperatives -
viewed the government bureaucrats it inherited in Washington with suspicion,
observers have been struck by the way in which policy making tends to start at
the top, rather than beginning in lower echelons of the bureaucracy and working
up.  Mr Reagan's decision to embrace the "Star Wars" strategic defence
initiative is one frequently cited example.

These characteristics mean that although cabinet officials can function
independently within broad limits, key decisions are made at the White House.
Thus a White House which is functioning badly is a particular liability to Mr
Reagan.  Under Mr Don Regan, it has functioned inadequately and this has become
worse as the Iran scandal has deepened.

An autocratic personality who surrounds himself with acolytes - some in the
White House refer to his staff as "the carpet mice" - Mr Regan has changed the
White House for the worse.  His determination to dominate the executive branch
and control access to the President has meant that Mr Reagan has been cut off
from the variety of opinion and judgment which would force a president who is
intellectually less than vigorous, to think issues through.

Mr Regan seems to thrive on confrontation and has frequently demonstrated
political ineptitude.

Those who predicted that trouble lay ahead when Mr Regan took over from Mr Baker
as Chief of Staff, have been vindicated as more and more of the able and
independently minded White House officials have quit.

It is for reasons such as these that many in Washington, friends and critics of
the President, including Mrs Reagan, have been saying since late last year that
a necessary condition for an improvement in the President's fortunes would be
the departure of his Chief of Staff.

Had he gone two months ago, many would argue that his departure would have
helped to cauterise the President's political wounds.  A new man and a new team
could have focused on the challenges facing Mr Reagan as a new Congress took
office.  They would have been less obsessed with the task of containing the
damage to the President and to their reputations from the Iran scandal.

Today, officials who have worked at the highest level of government say the
outlook is more grim.  It will take some months for a new Chief of Staff to
assemble an effective team, says one former cabinet official.

Much will depend, of course, on whom the President brings in.  An experienced
pragmatist may be the answer, one who knows the Republican Party and the
Administration, but who is realistic enough to recognise - as Mr Baker appears
to be doing - that dealing with a Democratic Congress from a weakened position
requires flexibility, not confrontation.

The danger of such an approach is that it may be a recipe for drift.  A fuzzy
agenda is already being translated into high rates of staff turnover and fading
political support for the Administration among disillusioned conservatives.

The central question remains: Does the 76-year-old President, recovering from an
enfeebling prostrate operation, still have the resilience and determination to
rescue his remaining two years in office from a decline which would cast a dark
shadow over his presidency?

The evidence so far is not encouraging.

LANGUAGE: ENGLISH

GRAPHIC: Picture

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                        Financial Times (London,England)

                           February 27, 1987, Friday

Reagan, Aides Castigated Over Iranian Arms Affair

BYLINE: Stewart Fleming, James Buchan, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 979 words


President Ronald Reagan was presented with a damning indictment yesterday of his
decision to sell arms to Iran and of the methods used by members of the White
House staff to support the Contra rebels in Nicaragua.

The report of the presidential commission appointed to investigate the Iran arms
sales concludes that in spite of Mr Reagan's explicit denials last November, the
sales of arms to Iran were designed to secure the release of US hostages held in
Beirut.

It is highly critical of the President's detached style of management and is
scathing in its judgment on several key advisers to whom he delegated authority.
It finds:

That Mr Donald Regan, the White House chief of staff, "must bear primary
responsibility for the chaos that descended upon the White House" when reports
of the arms sales first became public last November.

That Mr George Shultz, Secretary of State, and Mr Caspar Weinberger, Secretary
of Defence, "were not energetic in attempting to protect the President from the
consequences of his personal commitment to free the hostages ...  distanced
themselves from the programme ... (and) protected the record as to their own
positions on this issue."

That Mr William Casey, the former director of the Central Intelligence Agency,
appears to have "been informed in considerable detail about the specifics of the
Iranian operation" but did not explain to the President the risks associated
with its being run by Lt-Col Oliver North, not the CIA.

That Vice-Admiral John Poindexter, then National Security Adviser, "failed
grievously" in not alerting the President to the "serious legal and political
risks" associated with diverting profits from the Iran arms to the Contras.

The report says no evidence could be found that the President was aware of the
plan illegally to divert the proceeds of the Iranian arms sales to the Contra
rebels in Nicaragua.  However, it finds evidence of an attempted White House
coverup last November and says although "the President does indeed want the full
story to be told," members of his staff did not "initially share the President's
ultimate wishes" in the matter.

The report turns to the body that implemented the Iran-Contra initiative, the
National Security Council, a team of officials set up to advise the President on
foreign policy, and makes a series of recommendations aimed at keeping the body
separate from implementation of or final decisions on foreign policy.

An hour after receiving the 300-page report prepared by a commission chaired by
Mr John Tower, a former conservative Republican senator and Reagan loyalist, the
President appeared before a national television audience and vowed "I will do
whatever is necessary to enact the proper reforms." The President, who refused
to answer questions, is to address the nation next week on the report.

Mr Reagan's television address and the changes he makes in the expected shake up
of the White House are generally perceived to be critical if the President is to
begin to recover from the political damage he has suffered since the Iran-Contra
scandal broke on the day Mr Reagan's Republican party lost control of the
Senate.

After discussing the need for an impartial National Security Adviser, the report
gives warning against the use of people outside the US Government, such as the
former US Government officials and Iranian arms intermediaries.  It says that
"can create conflict-of-interest problems ...  (and) gives private and foreign
sources potentially powerful leverage in the form of demands for return favour
or even blackmail."

It says that "each Administration (should) formulate precise procedures for
restricted consideration of covert action and that, once formulated, these
procedures be strictly adhered to."

The disclosure in the report, particularly the criticisms of Mr Reagan's style
and the commission's judgment that "he did not seem to be aware of the way in
which the (Iran) operation was implemented and the full consequences of US
participation," drew sharp comment.  The reactions from some in Congress, even
among the President's nominal allies were indicative of the general perception
that he is fighting for his political life.

Rep Newt Gingrich, a leader of the younger right-wing Republicans in the House
of Representatives and often a staunch supporter of the President, said: "He
will never again be the Reagan he was before he blew it ...  He is not going to
regain our trust and faith easily."

Senator Robert Dole, the leading Republican in the upper chamber of Congress and
a prospective challenger for the party's presidential nomination, said of the
report: "It does indicate that blunders were made of colossal proportions."

Senator Dole endorsed for the first time heightened expectations that Mr Donald
Regan, the White House chief of staff, would soon resign.  He said Mr Regan was
a prime candidate for resignationg.

But Senator Sam Nunn, a leading Democrat, said the President "can recover ...
(and) for the good of the country he must."

The White House is anxious to suggest that the Tower report, if not the last
word on the scandal, is a comprehensive accounting of events and will give the
President an opportunity to put the affair behind him.

Commission members themselves pointed out, however, that it was limited in its
scope.  It was conducted at great speed, it lacked subpoena powers, and key
figures, including Messrs Poindexter and North, refused to give evidence.

The report points out that the commission was unable to find "hard proof" of a
diversion of funds to support the Contras but added that there was considerable
evidence.  It suggested that what might have been key material might have been
withheld.

Some in Congress yesterday were saying that the report's disclosures were only
"the tip of the iceberg" as other investigations were under way.

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                        Financial Times (London,England)

                           February 27, 1987, Friday

The Tower Commission Report;
Incompetence Rather Than Duplicity

BYLINE: Stewart Fleming, US Editor

SECTION: SECTION I; Pg. 4

LENGTH: 1083 words


Mr John Tower, a conservative Republican, former Senator and a Reagan loyalist,
tried yesterday to put the best face he could on his response when asked whether
President Reagan had performed well in the role he played in the Iranian arms
initiative and in pursuit of his policy of supporting the Contra rebels in
Nicaragua.

The Iran/Contra affair, he said, was an "aberration" when viewed against the
wider sweep of the President's foreign policy.  But he said the foreign policy
management system "broke down," adding: "You can say this.  The President holds
himself a bit aloof from the implementation of his policy."

However, the unanimous report, which Mr Tower - as chairman of the presidential
commission appointed last December to investigate the Iran affair - presented to
Mr Reagan at 10 am yesterday, did not pull any punches.

It had been billed in advance as a report which would shake the White House.
Even a cursory glance through its pages reveals why Mr Reagan and his top
political advisers have cancelled any plans for the weekend and are staying in
Washington to decide what the President should say.  He gives the nation his
response in a televised address next week to a scandal which has, as Senator
Daniel Patrick Moynihan predicted last November, left his Presidency
"tottering."

For in the ongoing debate about whether incompetence or duplicity explains how
the President blundered into the Iran scandal, the Tower report comes down
heavily (at least so far as Mr Reagan is concerned) on the side of incompetence.

In spite of the President's explicit denials, the report concludes that the sale
of arms to Iran which began in August of 1985 "almost from the beginning became
in fact a series of arms for hostages deals" and not primarily a programme aimed
at effecting a strategic opening to a key Middle Eastern state.

It says too that not only was the policy clearly at odds with expressed US
opposition to making deals for hostages and to its stance of neutrality in the
Iran-Iraq war it also "rewarded a regime that clearly supported terrorism."

But if the policy was flawed, the Tower report leaves no doubt that one reason
was because of the way it was implemented and because of the people who
implemented it.

Of Mr Reagan, it says, "he appears to have proceeded with a concept of the
initiative that was not accurately reflected in the reality of the operation."
It adds: "He did not seem to be aware of the way in which the operation was
implemented and the full consequences of US participation."

It traces this failure back, not to an aberration, but to "the President's
management style," which is to put the principal responsibility for policy
review and implementation on the shoulders of his advisers.  It adds that this
was a mistake in this case and that given the risks "Mr Reagan should have
ensured that the National Security Council system did not fail him."

But he did not "force his policy to undergo the most critical review of which
the NSC process is capable," the Tower report says, adding: "At no time did he
insist upon accountability and performance review."

But if as the report says "President Reagan's management style places an
especially heavy burden on his key advisers" in the Iran/Contra affair, the
advisers failed in their duty to compensate for this.

"Knowing his style they should have been particularly mindful of the need for
special attention to the manner in which the arms sale initiative developed,"
the Tower commission says, before delivering a scathing assessment of how the
president's top officials did no such thing.

The report points out that the Iran initiative, and the National Security
staff's involvement in the private network supplying the Contras, were both
handled almost casually, that neither initiative was subjected to rigorous
review, partly it seems in an effort to maintain secrecy.

Intelligence agencies were not brought in to vet the private individuals who
participated in the deals, some of whom, such as Mr Ghorbanifar, one of the
intermediaries in the arms transactions, were believed by the CIA to be
unreliable.

Implementation, too, was unprofessional, a failure attributed in part to the
fact that the National Security Council is not designed to implement covert
policies but to advise the President.

That all these inadequacies were never exposed, the Tower commission lays
largely at the feet of Mr Reagan's inner circle.

In a comment which would seem to put the last nail in the coffin of Mr Donald
Regan, White House Chief of Staff - whose resignation is expected to follow
quickly - the report says: "He must bear primary responsibility for the chaos
that descended upon the White House" when disclosure of the scandal did occur
and that prior to that, because he "more than almost any Chief of Staff of
recent memory asserted personal control over the White House staff and sought to
extend this control to the National Security adviser," he as much as anyone
should have ensured that the initiatives were managed in an orderly way.

Mr Regan is not alone, however, in being singled out for special criticism.  Mr
George Shultz, the Secretary of State, and Mr Caspar Weinberger, the Defence
Secretary, are attacked for not fulfilling their obligation to give the
President their full support and continued advice, or at least if they could not
in conscience do that, "To so inform the President."

Instead, the Tower Commission says they simply distanced themselves from the
programme, they protected the record as to their own positions on this issue.
They were not energetic in attempting to protect the President from consequences
of his personal commitment to freeing the hostages.

There is, the report makes clear, more than enough to go around.  It leaves no
doubt for example that Lt Col North, while he felt he was doing what the
President wanted was not under the control of the executive office and that Mr
John Poindexter, National Security Adviser, "failed greviously" by not informing
others in the Administration of the diversion of some of the profits from the
Iran arms sale to the Contras.

The Tower report will provide ample grist to the mills of Mr Reagan's political
enemies but Mr Tower was right yesterday to point out too that President Reagan
himself ordered the investigation and that its publication "demonstrates the
strength and resiliance of American democracy with its inherent capacity for
self analysis and self criticism."

LANGUAGE: ENGLISH

GRAPHIC: Picture White House Chief of Staff Donald Regan applauds as President
Reagan concludes his remarks t

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                        Financial Times (London,England)

                           February 27, 1987, Friday

The Tower Commission Report;
Iran/Contra Affair Reamins An Enigma After Inquiry Lasting Three Months

SECTION: SECTION I; Pg. 4

LENGTH: 1416 words


The Iran/Contra matter has been and, in some respects, still is an enigma.  For
three months the Board sought to learn the facts, and still the whole matter
cannot be fully explained.  The general outlines of the story are clear.  The
story is set out here as we now know it.

The Board had no authority to subpoena documents, compel testimony, swear
witnesses, or grant immunity.

Despite the refusal of VADM Poindexter and Lt Col North to appear, the Board's
access to other sources of information filled much of this gap.  The FBI
provided documents taken from the files of the National Security Advisor and
relevant NSC staff members, including messages from the PROF system between VADM
Poindexter and Lt Col North.  The PROF messages were conversations by computer,
written at the time events occurred and presumed by the writers to be protected
from dislcosure.  In this sense, they provide a first-hand, contemporaneous
account of events.

Section A: The Arms Transfer to Iran

Two persistent concerns lay behind US participation in arms transfers to Iran.

First, the US Government anxiously sought the release of seven US citizens
abducted in Beirut, Lebanon, in seven separate incidents between March 7, 1984,
and June 9, 1985.  Available intelligence suggested that most, if not all, of
the Americans were held hostage by members of Hizbollah, a fundamentalist
Shi'ite terrorist group with links to the regime of the Ayatollah Khomeini.

Second, the US Government had a latent and unresolved interest in establishing
ties to Iran.  Few in the US Government doubted Iran's strategic importance or
the risk of Soviet meddling in the succession crisis that might follow the death
of Khomeini.  For this reason, some in the US Government were convinced that
efforts should be made to open potential channels to Iran.

Arms transfers ultimately appeared to offer a means to achieve both the release
of the hostages and a strategic opening to Iran.

In the summer of 1985, a vehicle appeared that offered the prospect of the
hostages and strategic opening to Iran.

Israel had a long-standing interests in a relationship with Iran and in
promoting its arms export industry.  Arms sales to Iran could further both
objectives.  It also offered a means of strengthening Iran against Israel's old
adversary, Iraq.

On July 13 1985 Mr McFarlane apparently received a request, brought by an
emissary directly from Israeli Prime Minster Peres.

The Iranians reportedly said their contacts in Iran could achieve the release of
the seven Americans held in Lebanon but in exhcange sought 100 TOW misiles from
Israel.  This was to be part of a "larger purpose" of opening a "private
dialogue" on US/Iranian relations.

White House Chief of Staff Regan told the board that he and Mr McFarlane met
with the President on this issue in the hospital a few days after the
President's cancer operation on July 13.  Mr Regan told the board that the
matter was discussed for 20 to 25 minutes, with the President asking quite a few
questions.  He recalled the President then saying "yes, go ahead.  Open it up."

The board tried to resolve the question of whether the President gave prior
approval to Israel's transfer of arms to Iran.  We could not do so conclusively.

We believe that an Israeli request for approval of such a transfer was discussed
before the President in early August.  We believe that Secretary Shultz and
Secretary Weinberger expressed at times vigorous opposition to the proposal.
The President agreed to replenish Israeli stocks.  We are persuaded that he most
likely provided this approval prior to the first shipment by Israel.

In coming to this conclusion, it is of paramount importance that the President
never opposed the idea of Israel transferring arms to Iran.  Indeed, four months
after the August shipment, the President authorised the US Government to
undertake directly the very same operation that Israel had proposed.  Even if Mr
McFarlane did not have the President's explicit prior approval, he clearly had
his full support.

On August 30 1985 Israel delivered 100 TOWs to Iran.  A subsequent delivery of
408 more TOWs occured on September 14 1985.  On September 15 1985 Reverend
Benjamin Weir was released by his captors.

The US had only a supporting role in the August and September deliveries to
Iran.  Israel managed the operation.  The next three months saw an increasing US
role.

The President was clearly quite concerned about the hostages.  Mr MacFarlane
told the Board that the President inquired almost daily about the welfare of the
hostages.

At his meeting with the Board on January 26, 1987, the President said he
approved a convoluted plan whereby Israel would free 20 Hizbollah prisoners,
Israel would sell TOW misiles to Iran, the five US citizens in Beirut would be
freed, and the kidnappings would stop.  A draft Covert Action Finding had
already been signed by the President the day before the meeting on January 6,
1986.  Mr Reagan told the Board that the draft Finding may have been signed in
error.  The President did not recall signing the January 6 draft.

On January 17, a second draft Finding was submitted to the President.  It was
identical to the January 6 Finding but with the addition of the words "and third
parties" to the first sentence.

Although the draft finding was virtually identical to that signed by the
President on January 6, the cover memorandum signalled a major change in the
Iran initiative.  The memorandum proposed that the CIA purchase 4,000 TOWs from
Dod and, after receiving payment, transfer them directly to Iran.  Israel would
still "make the necessary arrangements" for the transaction.

This was an important change.  The US became a direct supplier of arms to Iran.
The President told the Board that he understood the plan in this way.  That day,
President Reagan wrote in his diary: "I agreed to sell TOWs to Iran."

On May 15, 1986, Mr McDaniel's notes indicate that the President authorised Mr
McFarlane's secret mission to Iran and the Terms of Reference for that trip.
Those notes indicate that the trip was discussed again with the President on May
21.

On May 25 the delegation arrived in Tehran.  Without the prior knowledge to Mr
McFarlane, the aircraft carried one pallet of HAWK space parts.  The delegation
was not met by any senior Iranian officals.  No hostages were released.  Because
of this, a second plane carrying the rest of the HAWK spare parts was ordered
not to come to Tehran.  Two days of talks proved fruitless.

Section B: Contra Divison.

Sizeable sums of money generated by the arms sales to Iran remain unaccounted
for.  Determining whether these funds from the sale of arms to Iran were
diverted to support the Contras proved to be extremely diffficult.  VADM
Poindexter, Lt-Col North, Israeli participants, and other key witnesses refused
to appear before the Board, and records for relevant bank accounts maintained in
Switzerland and elsewhere could not be obtained by the Board.  Notwithstanding,
there was considerable evidence before the Board of a diversion to support the
Contras.  But the Board had no hard proof.

Attorney General Meese told the Board that during his interview with Lt-Col
North on November 23 1986, North said that Dollars 3 m to Dollars 4 m was
diverted to the support of the Contras after the February shipment of TOW
missiles and that more (though how much Lt-Col North was not sure) was diverted
after the May shipment of Hawk parts.  Contemproaneous Justice Department staff
notes of that interview indicate that Lt-Col North said that the Israelis
handled the money and that he gave them the numbers of three accounts opened in
Switzerland by Adolpho Calero, a Contra leader.  The notes also indicate that
Lt-Col North said there was no money for the Contras as a result of the shipment
in October 1986.  By then Congressional funding had resumed.

Section C: The NSC Staff and Support for the Contras

Inquiry into the arms sale to Iran and the possible diversion of funds to the
Contras disclosed evidence of substantial NSC staff involvement in a related
area; private support for the Contras during the period that support from the US
Government was either banned or restricted by Congress.

The President told the Board on January 26, 1987, that he did not know that the
NSC staff was engaged in helping the Contras.  The Board is aware of no evidence
to suggest that the President was aware of Lt-Col North's activities.

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                        Financial Times (London,England)

                           February 27, 1987, Friday

Regan 'Must Bear Primary Responsibility'

BYLINE: Our Foreign Staff

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 450 words


The Tower Commission report on the Iran-Contra scandal spares few, if any,
senior members of President Reagan's foreign policy and security establishment.

Stating that "the obsession with secrecy and preoccupation with leaks threaten
to paralyse the Government in its handling of covert operations," the Tower
Commission report criticisms are directed at some of President Reagan's closest
advisers past and present:

White House Chief of Staff Donald Regan: "as much as anyone, should have
insisted that an orderly process be observed ...  He must bear primary
responsibility for the chaos that descended upon the White House."

Vice Admiral John Poindexter, former National Security Adviser who resigned on
November 25, "failed grievously" on the matter of the diversion of arms sales
profits to Nicaraguan rebels.

"Evidence indicates that (Poindexter) knew that a diversion occurred, yet he did
not take the steps that were required.  His clear obligation was either to
investigate the matter or take it to the President.  He did neither."

Secretary of State George Shultz and Defence Secretary Caspar Weinberger were
obliged "to give the President their full support and continued advice with
respect to the programme, or, if they could not in conscience do that, to so
inform the President.

"Instead, they simply distanced themselves from the programme.  They protected
the record as to their own positions on this issue.  They were not energetic in
attempting to protect the President from the consequences of his personal
commitment to freeing the hostages."

Colonel Oliver North, a key National Security Council staffer in the scandal,
was the primary US Government official involved in details of the clandestine
Iran operation.  The board found "considerable reason to question the actions."

Former Central Intelligence Agency (CIA) Director William Casey, who resigned
recently following surgery to remove a cancerous brain tumour, "appears to have
acquiesced in and to have encouraged North's exercise of direct operational
control over the operation," the Commission said.

It said Mr Casey failed to advise President Reagan of the political risks of the
initiative and should have urged that the US Congress be kept informed.

The commission said evidence suggested that Mr Casey became aware of the
diversion of funds almost a month before the story broke last November.

"He (Casey) too did not move promptly to raise the matter with the President.
Yet his responsibility to do so was clear," the report said.

Vice President George Bush received little mention in the report, which said he
supported the sale of arms to Iran.  He already has acknowledged he did.

LANGUAGE: ENGLISH

GRAPHIC: Picture Mr Donald Regan

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                        Financial Times (London,England)

                          February 28, 1987, Saturday

Regan Replaced By Former Senate Leader

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 739 words


Former US senator Howard Baker is to take over as President Reagan's Chief of
Staff in succession to Mr Donald Regan who quit last night in the wake of bitter
criticism of his role in the Iran arms affair.  The change is the first stage in
what is widely expected to be a wholesale shake-up of the White House staff.

Mr Baker is generally viewed as a non-ideological conservative and his
appointment appears as a victory for the moderate wing of the Republican Party.
He seems likely to have little difficulty supporting the pragmatic policies
being pursued by Mr James Baker at the Treasury, while unlikely to side with
hard-line opponents of arms control at the Pentagon.

The departure of Mr Regan, only hours after he had denied he was on the brink of
resignation, was being seen in Washington as a necessary, but by no means
sufficient, precondition for a restoration of the President's political
fortunes.

It removes what was widely seen as a millstone round the President's neck and
shows Mr Reagan, after months of drift, finally acting decisively to rescue his
administration from impending disaster.  Mr Baker's appointment also brings into
the White House a politician who knows Washington well.

However, there remained last night widespread agreement that there could be no
"quick fixes" for Mr Reagan's problems and that he would need to take the helm
and develop a clear agenda for his last two years.

Mr Baker faces a formidable challenge in trying to rebuild a White House staff
for a president two years from his exit from the political stage and in the face
of continuing investigations into the Iran-Contra arms and money affair.

He left his post as Republican Senate majority leader in 1985 and was expected
to seek his party's presidential nomination.  His decision to move to the
embattled White House may indicate that he has cooled on the idea of a
presidential run.

Senator Baker was one of the leading members of the Senate committee which
investigated the Watergate Scandal in 1973 during President Richard Nixon's
Administration.  He coined the memorable phrase: "What did the President know
and when did he know it?" in the course of those hearings.

Senator Baker was elected minority leader of the Republican Party in 1976, a
surprise victory which reflected in part the reputation he built as a result of
his role in the Watergate investigation.

The departure of Mr Regan last night was delayed by difficulties encountered by
the Administration in finding a successor.  Both Senator Paul Laxalt, a close
political friend of the President and Mr Drew Lewis, chief executive of Union
Pacific, a railway, were both reported to have told the White House that they
would not accept a fulltime post.

When the time finally came, however, the angry Chief of Staff made no attempt to
hide his feelings at being forced out, in part as a result of a running feud
with Mrs Nancy Reagan, the President's wife.  He sent a one-line letter to the
President which read: "Dear Mr President, I hereby resign as Chief of Staff to
the President of the United States.  Respectfully yours, Donald T Regan."

The White House remained under a barrage of criticism yesterday in the wake of
the Tower Commission report on Thursday which castigated the President's aides
for their part in the Iran-Contra arms affair, and also criticised the President
for a failure to involve himself actively in the formulation of vital government
policies.

Inquiries into the arms scandal will continue.  Senator David Boren, chairman of
one of the two special Congressional committees investigating the affairs said
yesterday their work would focus on questions such as where the money went, how
much money was involved, who knew about diversion of funds to the Contra rebels
and who directed it.

President Reagan is scheduled to spend the weekend closeted with advisers in
Washington deciding what actions need to be taken.  He is expected to address
the nation next week.

The Tower Report is seen by some on Capitol Hill as raising doubts over the
pending confirmation in the Senate of Mr Robert Gates, deputy to Mr William
Casey as Director of the Central Intelligence Agency, as Mr Casey's successor.

Mr George Shultz - who left Washington for China on Thursday just before the
release of the Tower Report which criticised him and Mr Caspar Weinberger, the
Defence Secretary - said that he did not intend to resign.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          February 28, 1987, Saturday

Man In The News;
Hatchet Job With A Fine Edge

BYLINE: Stewart Fleming

SECTION: SECTION I; Pg. 8

LENGTH: 1034 words


The London School of Economics, in those days a hot-bed of left-wing radicalism,
helped to shape the conservative politics of John Tower, the man who on Thursday
presented Ronald Reagan with a stinging 300-page indictment of the President's
work habits, his staff and the Iran-Contra arms deals.

"Mean" is how some have described the podgy 61-year-old former Texas senator,
whose biggest disappointment in the 24 years he served in Washington was the
Reagan Administration's decision to appoint Mr Caspar Weinberger to the job
Tower coveted - that of Secretary of Defence.  Tough but fair, says Tower's
admirers and, judging frm the report he wrote with two elder statesmen of the
Washington foreign policy establishment, Edmund Muskie and Brent Scowcroft, that
seems the more accurate assessment.

Tower's year at the LSE in 1952 left a lasting impression, but not the one left
on many of his peers.  After detailed research into the organisation of the
Conservative Party and writing a thesis entitled, The Conservative Worker in
Britain, he returned to Southern Methodist University in Dallas, Texas where he
now lectures convinced of the correctness of his conservative views.  There he
resumed work in what in those days was the Republican Party's lonely crusade to
convince the people of the Lone Star State that there were two national parties
fit to govern the US.

In 1961 Tower made his point when, with the support of Senator Barry Goldwater
from neighbouring Arizona, then the conservative movement's standard bearer in
the Republican Party, he became the first Republican to be voted into state-wide
office in Texas in a century.

He won the seat vacated by Lyndon Johnson when he became Vice President in the
Kennedy Administration.  Tower's victory was heralded as evidence of the
beginning of a shift in the balance of power in Texas to the cities, and in the
country, to the right.  "John the Texas giant killer," said the front-page
headline in the New York Herald Tribune the next day - a reference to Tower's 5
ft 5 in frame as well as his surprise victory.

When President Reagan announced last December that he had asked Tower to head a
three-member panel to look into the workings of the National Security Council it
was widely assumed that a thorough, readable but academic analysis of the
workings of the NSC would emerge.

For Tower was known to share Reagan's conservative vision of America and its
role in the world.  He had been one of the architects of the President's
military build-up at the beginning of the decade when he chaired the powerful
Senate Armed Services Committee.  Moreover, it was clear that the Iran-Contra
scandal had the potential to damage not only the Republican Party, but also -
given the roles played by right-wing ideologues - the conservative cause too.

By the time Tower had finished delivering his summary of the report on Thursday,
doubts about whether or not the Tower Commission had given the President an easy
ride were laid to rest.

Nattily dressed in his usual Savile Rowe pin stripe suit, waistcoat neatly
buttoned, and white handkerchief peeping from his breast pocket, Tower wasted no
time glossing over the disaster which he and his two colleagues, the Democrat
Muskie, and Scowcroft, a fellow Republican, believed had befallen the President
and the nation.

"There are indeed many powerful lessons to be learned," he said, in the deep
baritone which lends weight to his judgments.

"I think the President should have followed up more and monitored this operation
more closely.  I think he was not aware of a lot of the things that were going
on."

It was a harsh critique from a man who chooses his words carefully.

For what had been going on was orchestrated not from the bowels of some vast
distant bureaucracy, but from the basement of the White House itself.  It is
this fact that potentially embarrassing covert operations were run from the
building where the President lives that has most amazed Washington's foreign
policy experts.

What then led Tower, the giant killer of old, to take on the role of hatchet
man?

One answer must be that he and his colleagues cherish their own reputations for
integrity.  There had, said Tower, been no watering down of the report because
of personal or political loyalties.

It is clear too, that Tower felt the commission had an important role to play in
serving the interests of the country, perhaps helping to avoid similar mistakes
in future.  He said the people around Mr Reagan, knowing his detached management
style, had "failed the President" by not keeping him informed and trying to
compensate for this characteristic."

Some Republicans, however, have taken a stronger line than Tower, expressing the
fear that the two recent foreign policy disasters - the Iran-Contra scandal and
the Reykjavik summit - may be a sign of flaws in the foreign policy-making
process.  To Tower, the Contra affair was an "aberration." It was certainly not,
as some Democrats charge, a manifestation of the impatience of a popular
conservative President who turned to covert operations partly because broad
political support was lackng for what he wanted to do.

"It was not the public policy of the United States that was in question but the
fact that there was a covert activity going on that was absolutely contrary to
the public policy that was set by the President himself," Tower commented on
Thursday, glossing over the fact that on Iran the President had endorsed the
policy and that on Central America the covert activity supported his explicit
goals.

This balancing act - between toughness and loyalty to his political allies - is
one which Tower will doubtless seek to maintain in the coming weeks as he joins
the ranks of those testifying to the congressional committees whose work on
Irangate has yet to be done.

Just what John Tower hopes to gain from the process - apart from the sense that
he has been responsible for a job well done - is not at all clear.

He is still young enough to be in contention for a top Cabinet job if the
Republicans hold the White House in 1988.  His report has ensured that the same
cannot be said of a number of members of the Reagan Cabinet

LANGUAGE: ENGLISH

GRAPHIC: Drawing John Tower

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                        Financial Times (London,England)

                          February 28, 1987, Saturday

Regan Replaced By Former Senate Leader

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 739 words


Former US senator Howard Baker is to take over as President Reagan's Chief of
Staff in succession to Mr Donald Regan who quit last night in the wake of bitter
criticism of his role in the Iran arms affair.  The change is the first stage in
what is widely expected to be a wholesale shake-up of the White House staff.

Mr Baker is generally viewed as a non-ideological conservative and his
appointment appears as a victory for the moderate wing of the Republican Party.
He seems likely to have little difficulty supporting the pragmatic policies
being pursued by Mr James Baker at the Treasury, while unlikely to side with
hard-line opponents of arms control at the Pentagon.

The departure of Mr Regan, only hours after he had denied he was on the brink of
resignation, was being seen in Washington as a necessary, but by no means
sufficient, precondition for a restoration of the President's political
fortunes.

It removes what was widely seen as a millstone round the President's neck and
shows Mr Reagan, after months of drift, finally acting decisively to rescue his
administration from impending disaster.  Mr Baker's appointment also brings into
the White House a politician who knows Washington well.

However, there remained last night widespread agreement that there could be no
"quick fixes" for Mr Reagan's problems and that he would need to take the helm
and develop a clear agenda for his last two years.

Mr Baker faces a formidable challenge in trying to rebuild a White House staff
for a president two years from his exit from the political stage and in the face
of continuing investigations into the Iran-Contra arms and money affair.

He left his post as Republican Senate majority leader in 1985 and was expected
to seek his party's presidential nomination.  His decision to move to the
embattled White House may indicate that he has cooled on the idea of a
presidential run.

Senator Baker was one of the leading members of the Senate committee which
investigated the Watergate Scandal in 1973 during President Richard Nixon's
Administration.  He coined the memorable phrase: "What did the President know
and when did he know it?" in the course of those hearings.

Senator Baker was elected minority leader of the Republican Party in 1976, a
surprise victory which reflected in part the reputation he built as a result of
his role in the Watergate investigation.

The departure of Mr Regan last night was delayed by difficulties encountered by
the Administration in finding a successor.  Both Senator Paul Laxalt, a close
political friend of the President and Mr Drew Lewis, chief executive of Union
Pacific, a railway, were both reported to have told the White House that they
would not accept a fulltime post.

When the time finally came, however, the angry Chief of Staff made no attempt to
hide his feelings at being forced out, in part as a result of a running feud
with Mrs Nancy Reagan, the President's wife.  He sent a one-line letter to the
President which read: "Dear Mr President, I hereby resign as Chief of Staff to
the President of the United States.  Respectfully yours, Donald T Regan."

The White House remained under a barrage of criticism yesterday in the wake of
the Tower Commission report on Thursday which castigated the President's aides
for their part in the Iran-Contra arms affair, and also criticised the President
for a failure to involve himself actively in the formulation of vital government
policies.

Inquiries into the arms scandal will continue.  Senator David Boren, chairman of
one of the two special Congressional committees investigating the affairs said
yesterday their work would focus on questions such as where the money went, how
much money was involved, who knew about diversion of funds to the Contra rebels
and who directed it.

President Reagan is scheduled to spend the weekend closeted with advisers in
Washington deciding what actions need to be taken.  He is expected to address
the nation next week.

The Tower Report is seen by some on Capitol Hill as raising doubts over the
pending confirmation in the Senate of Mr Robert Gates, deputy to Mr William
Casey as Director of the Central Intelligence Agency, as Mr Casey's successor.

Mr George Shultz - who left Washington for China on Thursday just before the
release of the Tower Report which criticised him and Mr Caspar Weinberger, the
Defence Secretary - said that he did not intend to resign.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             March 3, 1987, Tuesday

Reagan's Choice For CIA Chief Withdraws

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Back Page; Pg. 40

LENGTH: 555 words


Mr Robert Gates, the man nominated by President Reagan earlier this month to
succeed Mr William Casey as director of the Central Intelligence Agency, has
asked for his nomination to be withdrawn.

His request was announced yesterday by Mr Howard Baker, the former Republican
Senator who has replaced Mr Donald Regan as White House chief of staff.

Mr Baker, appearing before the White House press corps in the middle of what he
said had been a hectic first day in office, also said that the President would
give a nationally televised address tomorrow.

Asked whether Mr Reagan would acknowledge in the speech that his policy towards
Iran had been wrong and that he had made mistakes - something even his political
friends are urging him to do - Mr Baker said that he had been over a draft of
the speech with the President.  He added: "I think it will have a profound
effect on the country's perception of his role as President and on his future
ability to govern."

Mr Baker's appearance before the White House press corps, and the decision to
withdraw Mr Gate's name seemed calculated to present a new image of openness and
decisiveness at the White House after months during which the Presidency has
appeared to be beleaguered and paralysed by the Iran/Contra arms scandal.

The President had been warned by Republican leaders on Capitol Hill that Mr
Gates's nomination had, as the President's friend, former Senator Paul Laxalt,
put it, been tainted by "the smell of Irangate."

The hard-hitting Tower Commission report into the Iran/Contra scandal indicated
the CIA had been more deeply involved in the operation than had previously been
assumed.  This raised the prospect of long delays before the Senate would act on
the Gates nomination and opened up the danger that Mr Gates's reputation might
suffer as Congressional investigations into the affair proceeded.

Mr Baker said he hoped that Mr Reagan himself would have been able to announce
yesterday the name of the new nominee as CIA director.  But he said, although a
number of individuals had been approached about the job, the White House had not
yet had an acceptance.

With Washington bubbling with speculation about whether, and how, the President
can restore confidence in his capacity to govern, Mr Baker went out of his way
to defend the President against charges by the Tower Commission that Mr Reagan
is out of touch with events.

"I do not see a hands-off President or an (Awol) President," Mr Baker said when
asked about claims that Mr Reagan was not in control of the Government and that
his wife Mrs Nancy Reagan is more in control than her husband.

"(The questions) uppermost in many people's minds (are) is this President fully
in control of his Presidency, is he alert, is he fully engaged, is he in contact
with the problems?  and I am telling you, it's just one day's experience and
maybe that's not enough, but today he was superb."

There is mounting controversy about Mrs Reagan's role in the ousting of Mr
Regan.  While White House officials are portraying the President as aggressively
determined to revive his political fortunes, public reports on the events which
led to Mr Regan's departure portray the President as even now a passive
bystander in the choice of his successor and Mrs Reagan as the architect of Mr
Regan's downfall.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            March 4, 1987, Wednesday

White House Nominates CIA Director-General

BYLINE: Stewart Fleming, Lional Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 507 words


Mr William Webster, director of the Federal Bureau of investigation, is to be
nominated to succeed Mr William Casey as director-general of the Central
Intelligence Agency, the White House announced yesterday.

Mr Casey retired earlier this year after an operation for a brain tumour.

The announcement came in the wake of evidence that President Reagan was anxious
to fill the post quickly, but was having some difficulty finding a nominee
following the decision earlier this week to withdraw the nomination of Mr Robert
Gates, Mr Casey's deputy.

Mr Webster, 62, took over as director of the FBI from the legendary Edgar Hoover
nine years ago.

The agency's reputation had slumped amid evidence that in the 1960s and 1970s it
conducted what many Americans felt were politically inspired investigations
against individuals who had not committed any crimes, but were challenging the
political orthodoxy of the day.

Those investigated included the Rev Martin Luther King, the civil rights leader.

Mr Webster is credited with improving the reputation of the agency and he has
successfully steered clear of political controversy during his tenure.

He had indicated that he would like to retire next year when his ten-year term
of appointment expired.  Mr Webster hoped to avoid a replacement having to take
office in the midst of a presidential election campaign.

In the wake of the Iran-Contra affair, he faces a similar task in restoring the
reputation of the CIA.

The Tower Commission report into the Iran arms sales published last week
suggested that the CIA was more deeply involved in the scandal than Mr Casey,
then the director, admitted to congressional committees last November.

Mr Casey's fascination for covert operations has also damaged the CIA's
reputation.  It can expect to come under close scrutiny from Congress as
investigations into the arms scandal proceed.

The Washington Post reported yesterday that Mr John Tower, the former
Conservative Senator from Texas who chaired the three-strong panel investigation
into the arms scandal, had turned down the CIA job.

Mr Tower's refusal underlined the problems the President and his White House
Chief of Staff, Mr Howard Baker, have faced in attracting high-calibre people to
fill jobs in the final two years of the creaking Reagan presidency.

Mr Gates withdrew his nomination on Monday, bowing to pressure from Congress,
which was unhappy about his failure to disclose in testimony full details about
the CIA's knowledge of secret US arms shipments to Iran.

Among the potential successors were Mr Brent Scowcroft, former National Security
Adviser to President Ford and a member of the Tower panel, and Senator Malcolm
Wallop, the Republican from Wyoming.

Mr Baker did not accept the job when it was offered to him earlier this year.

The President suffered another blow yesterday with a New York Times poll showing
that only 24 per cent of people believed he was in charge of the Government,
while his approval rating stood at 42 per cent, a four-year low.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            March 5, 1987, Thursday

Reagan Nominee To Head CIA Receives Widespread Support

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 353 words


President Reagan's nomination of Mr William Webster, head of the Federal Bureau
of Investigation, as the new director of the central intelligence agency, was
applauded by a wide section of Democrats and Republicans yesterday.

Mr Webster, a lifelong Republican who prefers to be called "Judge" because of
his time on the bench, was seen as a safe, if not exactly inspiring choice.
While Mr Webster has a reputation as the man who cleaned up the FBI afer J Edgar
Hoover, he has next to no experience of foreign affairs.

His nomination, announced hastily on Tuesday evening, reflects the desperate
efforts by the White House to show that Mr Reagan is back in control of his
Administration in the wake of the Tower Report's withering criticism of his
laid-back management style.

Mr Webster's nomination removes an important obstacle to the White House
campaign to show that the Administration is back on course after last week's
devastating Tower Commission report.

The first step was the appointment of a new White House Chief of Staff, Mr
Howard Baker, the second was the withdrawal of Mr Robert Gates' nomination as
head of the CIA.  The third was to find a successor to Mr Gates.

Mr Webster, 63, took over the job of running the FBI in 1978 when the agency was
demoralised by disclosures about improper activities such as illegal
phone-tapping of civil rights and radical groups.

He is credited with moving the FBI into the modern era of crime fighting, away
from bank robberies and stolen car rings and into political corruption and drug
enforcement.

Of all the leading figures in the Reagan Administration, he has managed to steer
clear of most of the Iran-Contra fall-out.  The one unexplained problem is why
he agreed to delay an FBI investigation into a Florida-based charter airline
with links to the secret private aid network to the Nicaraguan Contra rebels.

One potential difficulty for Mr Webster lies in the continuing Iran scandal
investigations.  His FBI agents have been helping the independent counsel Mr
Lawrence Walsh in his criminal investigation which focuses in part on the CIA.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            March 7, 1987, Saturday

Man In The News;
Baker To The Rescue, Perhaps

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Pg. 8

LENGTH: 1722 words


The American people's continuing fund of goodwill towards their beleaguered
President was in evidence again this week.

In the wake of a televised address to the nation in which Mr Reagan as good as
admitted that he had not been paying attention as his officials launched their
dubious diplomatic initiative towards Iran, opinion polls showed that public
approval of the President had jumped by fully 10 percentage points from the
four-year lows struck last weekend after the publication of the damning Tower
Commission report into the Iran-Contra arms scandal.

Much as this turnaround will delight Mr Howard Baker, the newly installed White
House Chief of Staff, few in Washington believe that Ronald Reagan can ever
again be the commanding political figure he was in the first six years of his
presidency.

As Mr Reagan escapes to his Camp David retreat in the Maryland mountains this
weekend, where President Jimmy Carter retreated before telling his countrymen in
1979 that the United States was suffering from a "malaise," he leaves behind a
Washington seething with speculation.

How, his political friends and rivals are asking, will the continuing shake up
of personnel at the White House alter the political calculations on such issues
as the Federal budget deficit, economic policy, relations with the Soviet Union
and prospects for th 1988 elections?

That there will be changes is not in doubt; indeed there already have been.
With a flair for political timing which will serve as yet another warning to
those in Washington who still underestimate him, Mr Mikhail Gorbachev, the
Soviet leader chose the weekend following the publication of the Tower
Commission report, when the White House was reeling in disarray, to launch a
bold new arms control initiative.

To sceptics in Washington who see arms control as a dangerous snare and a
delusion, Mr Reagan's speedy counter-proposal confirmed their worst fears.  A
weakened President, it is suggested is swallowing Soviet bait in pursuit of a
foreign policy "triumph."

Arms control is a particularly tricky issue for the President and his new Chief
of Staff, former Senator Howard Baker.  The subject has already divided the
Defence Department and the State Department, caused tension in the Western
alliance, and could yet divide and weaken a Republican party whose conservative
wing worries that arms talks could be a step on to a slippery slope towards a
more accommodative approach to Moscow on issues ranging from regional conflicts
in Afghanistan and Central America to the "Star Wars" strategic defence
initiative.

It is on this issue above all that Mr Baker's reputation will be forged.  Some
on the right worry that his voting record on conservative issues, coupled with
his natural inclination to conciliate and build coalitions in order to get
things done, will further dilute the conservative thrust of the Reagan
presidency.

The chunky 61-year-old Baker has already had a positive impact on the White
House bringing to an institution which had been engaged in a dour struggle with
the Congress and the press a badly needed touch of openness.

As the week progressed he reached out to all parts of the political spectrum in
order to try to rebuild the White House's credibility and forge alliances to get
the presidency actively involved again in Washington's political life.

That Mr Baker can play a major role in shaping the last two years of Mr Reagan's
presidency is not in doubt.  Indeed one judgment being offered on Capitol Hill
is that his decision to eschew a long-shot run for the Republican Party's
presidential nomination in 1988 was a political gamble which may pay off
personally.  If he helps to revive Mr Reagan's prestige, Mr Baker could
transform himself into "the wonder boy of American politics," says Rep Henry
Hyde.

But what are the chances that he will be able to improve Mr Reagan's position
beyond the short term boost to his fortunes which the polls are already
reflecting in the wake of his speech.

Much will depend on how he restructures the White House decision-making process.
The Tower Commission exposed to public view a White House in which an
absent-without-leave Ronald Reagan was displaying so little interest in the
business of governing that he did not understand the implications of vital
decisions he was making on Middle East policy, and, judging from the Reykjavik
summit, on US-Soviet relations.

Many put the blame for this squarely on his advisers, in particular Mr Donald
Regan, the White House Chief of Staff, who cut the President off from the range
of options he had been exposed to when Mr James Baker (the current Treasury
Secretary) was Chief of Staff.

By pandering to Mr Reagan's intellectual indolence and encouraging his
passivity, Mr Regan enhanced his own power and, it would appear, on some issues
turned Mr Reagan into a puppet President who was not even exercising the broad
instinctive judgment which admirers say are his strength.

It is too much to expect that Mr Reagan at his age, and in less than robust good
health after his prostate operation, can change the work habits of a lifetime,
whatever friends such as Senator Paul Laxalt say.

But Mr Baker could, as Chief of Staff, set up a decision-making process to
compensate for the President's weaknesses, just as the White House team in the
first Reagan Administration did, making sure the President is forced to
concentrate upon at least a narrow range of key issues and decide on realistic
alternatives.

If Mr Baker does this and, working with other members of the Administration,
brings his own skills as a legislative tactician to bear, the White House could
again become a vigorous participant in the work of the
Democractically-controlled Congress.

Where this participation might lead is another question.  There is every reason
to believe that arms control opponents in Washington now face a daunting task if
they are to block the momentum which seems to be building towards an arms
control agreement with Moscow.

Mr Baker's known predilections, Moscow's evident interest in moving arms control
process forward, a majority on Capitol Hill which seems to favour curbing a
costly defence build-up, all suggest that the prospects for a Washington summit
have improved significantly in the past 10 days.  Mr George Shultz the Secretary
of State, will be much relieved for it provides him with an agenda at a time
when he, too, has had to absorb some bruising criticism.  It was announced
yesterday that Mr Shultz will visit Moscow next month.

It is not just on strategic issues, however, that Mr Baker is expected to bring
a less confrontational and non-ideological twist to Reagan Administration
policy.  One Federal Reserve Board official remarked that hands were raw with
clapping at the central bank when news of Mr Regan's departure broke.  Mr Bakers
gets on well with Mr Volcker.

The change means that there will not be a White House vendetta in the early
summer to try to prevent Mr Volcker's re-appointment in August.  Mr Volcker may
or may not want to take the job again.  if he does not, at least a smooth
transition to a respected successor can be anticipated.

Republican conservatives fear, probably with justification, that in the weeks
ahead the new Chief of Staff will move decisively to tackle the issue of the
Federal budget deficit, and in order to get the deficit on a firmly declining
trend conceded more openly than the President has been willing to.  That some
form of tax increase is a necessary ingredient of a rational fiscal policy.

For his part, Mr Baker will have great care not to be perceived as setting up
some form of regency at the White House.  Mr Baker has only to remember how Mrs
Nancy Reagan reacted to this sort of behaviour by Mr Donald Regan; nor can he
afford to ignore the conservative right, which is stronger in the rank and file
of the Republican party than it is in Washington.

Even among the ranks of the conservatives, however, there are those who share
the Washington consensus that Mr Baker's appointment was an inspired political
move, prompted by Mr Laxalt and Mrs Reagan.  A reinvigorated Ronald Reagan says
Mr Stuart Butler of the Heritage Foundation, a conservative Washington think
tank, can frame the debate on conservative issues.

This may be wishful thinking.  Mr David Smick, a Washington political
consultant, points out that a "lame duck" President who cannot stand for
re-election in 1988 faces, even without Irangate, an inevitable decline in his
political influence.  With no presidential political agenda the Democrats are
perceived in Washington to have the initiative on Capitol Hill.  "The Democrats
are now seen to be the party of ideas." says Mr Smick.

Nor can the potential for new misfortunes to strike the President be dismissed.
The US economy scarcely has a rosy glow of health.  American bankers are
threatened by a renewal of tensions over the Third World debt crisis, the trade
deficit shows little sign of declining and inflation could accelerate to the
point where the Fed has to tighten credit.

The unresolved issues of the Iran-Contra affair, in particular the paper chase
now underway to try to discover into whose pockets the profits from the Iranian
arms deal went, will occupy Congress (and the President) for months to come.

The President's critics are already charging that, in spite of a good speech on
Wednesday night, Mr Reagan ducked the issue of his own past "mis-statements,"
his forgetfulness about when he approved the arms deal, and the apparent "cover
up" at the White House when the Iran scandal first broke.  Should it emerge in
the public hearings that he is still being less than forthright, the President's
greatest political asset, the personal affection many Americans feel for him,
will not be enough to pull him through.

It is then by no means certain that the President will serve out his term with
dignity, although his chances have improved significantly.  The Republican
party, which must defend its diminished representation in Congress, must hope
that former Republican Senator, Howard Baker, will be able to build on the
foundations he and Mr Reagan laid this week.  If Mr Baker fails, he and Mr
Reagan may well consign the Republicans to a lengthy period in the political
wilderness.

LANGUAGE: ENGLISH

GRAPHIC: Drawing

                   Copyright 1987 The Financial Times Limited


                              42 of 614 DOCUMENTS

                        Financial Times (London,England)

                             March 13, 1987, Friday

North Fails To Block Iran Arms Sale Probe

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 205 words


A federal judge yesterday rejected a lawsuit by Lt-Col Oliver North, the sacked
White House aide, which sought to block an investigation into the Iran arms
scandal by Mr Lawrence Walsh, special prosecutor.

The decision clears the way for Mr Walsh to prepare criminal charges against
those involved in the scandal.

Col North had sought to challenge the constitutionality of the special
prosecutor's role as established under the 1978 Ethics of Government Act.

Judge Barrington Parker said: "The Nation demands an expeditious and complete
disclosure of our government's involvement in the Iran-Contra affair."

In a separate case, a federal judge rejected a similar lawsuit by Mr Michael
Deaver, a former senior White House adviser to President Ronald Reagan and close
friend of Mrs Nancy Reagan, challenging a special prosecutor investigation into
his lobbying activities.  Mr Deaver - who is facing perjury charges in front of
a grand jury - appealed and sought an emergency order to block an indictment
against him.

Meanwhile, the House of Senate select committees investigating the Iran arms
scandal voted to give limited immunity to the first key witnesses in the affair,
an Iranian businessman, Mr Albert Hakim.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            March 17, 1987, Tuesday

Poindexter May Gain Immunity

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 469 words


Rear-Admiral John Poindexter, former National Security Adviser to President
Ronald Reagan and a star witness in the Iran arms scandal, is likely to be
offered this week limited immunity from prosecution, under a tentative agreement
between the two Congressional Select Committees investigating the affair.

He would be the most senior official to be dealt with in this way during the
Congressional investigation.  His testimony could shed light on whether Mr
Reagan knew about or authorised the diversion of profits, from secret US arms
sales to Iran, to Contra rebels in Nicaragua.

The Senate and House Select Committees are to meet tomorrow to vote on whether
to offer immunity to Admiral Poindexter, after an outline agreement between
their respective chief lawyers.  The accord would have to be cleared with Mr
Lawrence Walsh, the court-appointed, special prosecutor, who has been pressing
for a delay of 90 days before any immunity were granted.

The accord appears to satisfy the demands of Mr Walsh, who is anxious not to
prejudice the possibility of criminal charges, and those of the two committees,
members of which have been frustrated by their lack of progress.

Congress would refrain from granting immunity to Lt Col Oliver North, the other
key witness in the scandal, and would not summon Admiral Poindexter for 60 days.
Mr Walsh has the power to apply to court for a further 30-day delay so he would
secure the 90-day extension he has requested.

Admiral Poindexter and Col North have refused to testify before Congress,
invoking the protection of the Fifth Amendment against self-incrimination. The
admiral's testimony is awaited with trepidation by the White House, which has
been eager to present the image of a re-invigorated president, now that Mr
Howard Baker has become the new chief of staff at the White House.

One Congressional aide said yesterday: "Poindexter will be a credible witness."

Under the accord between the staff of the two committees the admiral could begin
his public testimony about mid-June.  It is unclear when Col North would be
summoned.

Immunity has been given to five people so far, including Mr Albert Hakim, the
arms dealer.

White House advisers were split yesterday over whether to encourage Mr Reagan to
give a news conference on Thursday.  It would be his first for four months and a
personal test.  the 76-year-old president gave a faltering performance in
November when he faced reporters on the Iran affair.

He could be expected to face a barrage of questions on the Iran arms scandal if
Adm Poindexter were granted immunity.

White House strategy has been to divert attention from the Tower commission
report, which sharply criticised the president's management and policy of
selling arms to Iran, in return for US hostages held in Lebanon.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             March 20, 1987, Friday

Reagan Awaiting Contra Fund Details

BYLINE: Lionel Barber, Nancy Dunne, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 308 words


President Ronald Reagan said last night that he was still waiting for an
explanation of the secret operation to funnel profits from US arms sales to Iran
to the Nicaraguan Contra rebels.

Mr Reagan, emerging from semi isolation to give his first news conference for
four months, denied all knowledge of the Contra funds, played the role of
innocent bystander before reporters questioning him in the arms scandal.

The 76-year-old President rejected reports that he had been informed about the
diversin of funds by his former national security adviser, rear admiral John
Poindexter.  "it came as a complete surprise to me," he said.

"I still do not have the answer to that money," Reagan said tonight.

The news conference had been billed as a critical measure of President Reagan's
partial comeback since his prostate surgery and a shake-up among White House
staff precipitated by the Tower Commission report into the Iran/Contra arms
scandal.

Mr Reagan admitted that his policy of selling arms to Iran as part of a
political overture had degenerated into bartering arms for hostages.  Asked if
he would do things differently another time, he replied: "I would not go down
that same road again."

But as he walked away from reporters shouting questions, he was asked if Vice
President George Bush had objected to the policy of selling arms to Iran.  "No,"
the President replied, in what commentators agreed last night could be further
damage to Mr Bush's hopes of securing the Republic Party Presidential nomination
next year.

Before he answered the questions which concentrated on the arms scandal Mr
Reagan read a brief statement reiterating his call for a balanced budget
amendment to the US constitution and ruled out once again any suggestion of a
tax increase.  "My pledge to veto any tax increase remains rock solid," he said.

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                        Financial Times (London,England)

                            March 26, 1987, Thursday

Iran Scandal Prosecutor Seeks Saudi Co-Operation

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 390 words


Mr Lawrence Walsh, the court-appointed special prosecutor investigating the Iran
arms scandal, has sought co-operation from the Saudi Arabian Government and will
soon make similar approaches to key Israeli officials, and South Korea and
Taiwan.

The broadening scope of Mr Walsh's inquiries matches parallel investigations by
the two congressional select committees, which have sent subpoenas to more than
50 people, more than 60 companies and dozens of federal agencies.

The subpoenas specifically ask for all tax, bank and telephone records and
reflect the intensity of the various probes into the scandal which, after last
week's news conference by President Reagan, have lost a little steam.

The New York Times and the Washington Post yesterday reported that inquiries had
begun to home in on Mr William Casey, the former CIA director, as a key figure
in the secret effort to aid the Nicaraguan Contra rebels.

Mr Casey, who is seriously ill with brain cancer, is unlikely to be able to
testify about his role in the Iran affair.  But there is a growing impression
that he took a special interest in finding ways to circumvent the 1984-85
congressional ban on aid to the Contras, and that he turned to Lt Col Oliver
North, the sacked White House aide, to co-ordinate the funding operation.

Mr Walsh meanwhile was reported to have asked Mr Bandar Bin Sultan, the Saudi
Ambassador to the US, to volunteer to answer questions about the Iran-Contra
affair.

According to Mr Robert McFarlane, former National Security Adviser, Mr Bin
Sultan arranged secret contributions to the Contras at the rate of Dollars 1 m a
month in mid--1984, which grew to Dollars 32 m in 1984-85.  He has denied the
allegations, and that any Saudi official was involved.

Attention has also focused on South Korea and Taiwan since the admission by
retired army Major General Mr John Singlaub that he solicited Dollars 10 m each
from two countries in late 1984, while keeping Lt Col North informed of his
efforts.

The decision on whether to co-operate with the congressional inquiries is a
difficult one for Israel, Saudi Arabia, Taiwan and South Korea.  Both the Saudis
and Israel rely on congressional support for US arms purchases, while Israel is
the largest single beneficiary of US military and economic aid which reached
Dollars 3 bn last year.

LANGUAGE: ENGLISH

GRAPHIC: Picture Lawrence Walsh, looking further afield

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                              46 of 614 DOCUMENTS

                        Financial Times (London,England)

                             March 30, 1987, Monday

US 'Help' For Thatcher Attacked

BYLINE: Michael Cassell, Political Correspondent

SECTION: SECTION I; Back Page; Pg. 36

LENGTH: 350 words


Mr Denis Healey, the shadow Foreign Secretary, yesterday attacked White House
officials for what he claimed was an attempt to help Mrs Thatcher's re-election
prospects by attacking Labour defence policies.

Mr Healey, who was with Mr Neil Kinnock, the Labour leader, when he saw
President Ronald Reagan in Washington on Friday, accused a White House spokesman
of distorting what was said during the meeting.

Mr Healey said appeared that although the President had declared that he did not
intend to interfere in a British election, some of his advisers had thought it
would be "a good idea to try and help Mrs Thatcher in her election battles."

Speaking on BBC television, Mr Healey added: "Whether this was a reward for Mrs
Thatcher being the only statesman in the world to deliver her implicit
confidence in President Reagan's integrity over the Iran-Contra affair or
whether it has some more sinister meaning I do not know."

Mr Healey said the President, who mistook him for Sir Anthony Acland, the
British ambassador to the US, had been badly briefed by his advisers.

He said he had held separate talks with Mr Paul Nitze, the President's special
adviser on arms control, who had raised no criticisms of Labour's defence
strategy.

The Labour team had expected the State Department to issue a statement after the
White House meeting, but it was made by Mr Marlin Fitzwater, the chief White
House spokesman.  Mr Kinnock and Mr Healey are denying that some of the issues
covered in the statement - such as the implied threat that Labour policies posed
to the Geneva arms talks - were raised in the session with the President.

The US condemnation of Labour's policy will support those in the party who felt
the visit should not have taken place because outright rejection of its defence
stance - however it emerged - was inevitable.

Mr Kinnock remained determined to promote the policy in the US and his office
said last night that weekend reaction from within the parliamentary party and
among shadow cabinet colleagues endorsed his decision to go and spell out
Labour's position.

LANGUAGE: ENGLISH

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                              47 of 614 DOCUMENTS

                        Financial Times (London,England)

                             April 3, 1987, Friday

Democrats Stall Reagan's Attempt To Revive Fortunes

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 505 words


President Ronald Reagan's efforts to revive his political fortunes were checked
yesterday when the Democratically-controlled Congress voted to override his veto
of a controversial Highways Bill.

At the same time, an extraordinary public quarrel broke out within the
Administration over its policy on the value of the dollar.

Mr Clayton Yeutter, the President's trade representative, indicated in a
congressional hearing that he believed a further decline in the dollar would
help to improve the US trade balance.  Shortly after, the White House publicly
repudiated Mr Yeutter's remarks.

Mr Marlin Fitzwater, the White House spokesman, told reporters that the trade
representative's comments "do not reflect the President's position." The
comments, he added, "were in response to a hypothetical situation.  Only the
President and the Secretary of the Treasury (Mr James Baker) are authorised to
comment on the dollar."

In yet another reverse, Mr Richard Darman, Mr Baker's deputy at the Treasury,
who has played a big role in formulating domestic and international economic
policy over the past two years, announced that he was joining the growing band
of officials quitting the Reagan Administration.  He is to join the US
investment banks of Shearson Lehman Brothers as a managing director.

Where the day-to-day struggle for political dominance in Washington is
concerned, the Senate vote to override Mr Reagan's veto of the Dollars 88 bn
(54.9 bn Pounds (pds)) Highways Bill represents a serious, but by no means
crippling, setback to the President's efforts to recover from the disclosure of
the Iran/Contra arms dealings.

The two-day struggle over the Highways Bill culminated yesterday in a visit by
Mr Reagan to Capitol Hill.  He attempted to secure the single vote in the Senate
he needed to prevent the bill becoming law.

However, the Democratic Party successfully divided the Republican opposition and
mustered the two-thirds majority needed to override the president.

In the financial markets, analysts' attention will be captured by the evidence
of divisions on dollar policy within the Administration, the nervousness about
currency markets and Mr Yeutter's harsh attack on Japan's economic policies.

In testimony to the Senate Finance Committee, which is preparing trade reform
legislation, Mr Yeutter assailed America's Asian trading partner.

Mr Yeutter said the Reagan Administration felt a sense of frustration because
the Japanese did not appear to be implementing a recent government-commissioned
report advocating a shift in the structure of the Japanese economy away from
exports.

In a singularly tactless remark, given the US decision to apply punitive duties
on Japanese electronics imports a week ago, under section 301 of the US Trade
Act, Mr Yeutter described the section as "the H-bomb of trade policy which ought
to be dropped by the President and no one else." Some legislation on Capitol
Hill proposes limiting the President's discretion where use of section 301 is
concerned.

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                        Financial Times (London,England)

                             April 3, 1987, Friday

Regan Loses Key Treasury Man

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 293 words


Mr Richard Darman, the deputy US Treasury Secretary who resigned yesterday to
take up a post with Shearson Lehman Brothers, the US investment bank, was for
the past six years one of the most influential figures and policy makers in the
Administration of Mr Ronald Reagan.  As a top adviser to Mr James Baker,
President Reagan's White House Chief of Staff during his first term, Mr Darman,
43, moved with Mr Baker to the US Treasury in 1985 where he helped shape key
policy initiatives such as the successful tax reform law last year and US
efforts to promote international economic policy co-operation.

Mr Darman leaves Mr Baker amid turmoil and uncertainty in the international
currency markets caused by the announcement last week by President Reagan of
trade sanctions against the Japanese.

A shrewd but largely invisible figure, Mr Darman was once described by Mr
Michael Deaver, President Reagan's former top White House aide, as one of the
most powerful people in the White House.

He was the man who controlled the paper flow and when he moved to the Treasury,
he helped the department regain its influence after an erratic period of
stewardship by Mr Donald Regan.

Mr Darman's departure is the latest in a string of senior resignations within
the Reagan Administration.  Though this is not considered unusual as President
Reagan moves towards the end of his second and final term in office, the
departures have probably been accelerated by the Iran-Contra scandal.

Mr Darman will join Shearson on April 13 as a managing director working with
corporate clients and developing a "strategic approach" to Shearson's financial
needs.

He will also work on public finance and privatisation from the bank's Washington
and New York offices.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            April 9, 1987, Thursday

CIA Pledge To Work Closely With Congress

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 283 words


Judge William Webster, the FBI director nominated to be the new head of the
Central Intelligence Agency, yesterday pledged to co-operate with Congress in
sharing sensitive details of covert US operations.

Mr Webster, who is expected to win confirmation, gave unequivocal backing to
Congress's powers of oversight on intelligence matters and said he would resign
if a President refused to accept his advice on the need for notification.

The oversight issue has become controversial in the wake of disclosures that
President Reagan failed for at least 11 months to notify Congress of secret arms
sales to Iran.

Mr Webster, widely credited for reforming the FBI during his nine years as
director, appeared to have learned from the experience of Mr Robert Gates, the
deputy CIA director who was forced to withdraw his nomination last month.  His
action discloses that he had failed to notify Congress of the Iran arms sales
and that he may have changed an intelligence assessment of the Soviet threat to
Iran to suit the Reagan Administration.

Mr Webster, appearing before the Senate Intelligence Committee, was questioned
about his contacts with Mr Edwin Meese, the US Attorney General, before the
disclosure that up to Dollars 30 m (18.6 m Pounds (pds)) of secret profits from
arms sales to Iran had been diverted to the Nicaraguan Contra rebels.

Mr Meese has been criticised for not calling in FBI agents as part of the
Iran-Contra inquiry and for apparently failing to prevent Lt Col Oliver North,
the sacked White House aide, from destroying key documents.  Mr Webster said the
FBI did not become involved in Mr Meese's inquiry because "neither of us saw
this as a criminal inquiry."

LANGUAGE: ENGLISH

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                              50 of 614 DOCUMENTS

                        Financial Times (London,England)

                            April 11, 1987, Saturday

Reagan Says Missile Talks Breakthrough Is Possible

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 693 words


President Ronald Reagan moved yesterday to give fresh momentum to the arms
control talks with the Soviet Union.  He said that Moscow had shown a "new
seriousness" in the negotiations and that "a breakthrough in the talks on
intermediate-range missiles is now a distinct possibility."

In a week in which calls have been made for Mr George Shultz, the US Secretary
of State, to cancel his visit to Moscow next week because of Soviet espionage at
the US Embassy in Moscow, Mr Reagan left no doubt of his determination not to
let the Marine spy scandal deflect him from pursuing the revived arms control
agenda.

"The welcome mat is still out for Mr Mikhail Gorbachev, Soviet leader, to visit
America," Mr Reagan said in a speech which seemed designed in part to counter
Soviet charges that the US has been dragging its feet on arms control issues.

The President offered the obligatory reassurances to his right wing, whose
support he will need in Congress for ratification of any agreement reached on
intermediate nuclear forces (INF).  He gave a broadly optimistic assessment of
US-Soviet relations, however.

It has been clear for several weeks that the Reagan administration has been
anxious to move the INF talks forward.  This stance has generally been seen as
designed to give the President a popular political agenda which may help to
boost his battered credibility and take attention off the Iran-Contra arms
scandal which will soon become the subject of public hearings in Congress.

On a day which had seen widespread reports that the President is stiffening his
stance on some of the issues relating to the strategic or long range arms
control talks, Mr Reagan accused Moscow of trying to "stifle" the so-called
"Star Wars" Strategic Defence Initiative and said: "I challenge the Soviets to
join us in seeking a safer strategic balance by relying less on mutual offensive
threats."

He also said that there are several aspects of US-Soviet relations which the US
finds deeply unsatisfactory.  On the "bleeding wound" of Afghanistan he called
for Moscow "to set a date this calendar year when it will begin the withdrawal
of Soviet troops on a speedy schedule." He said that SDI should not be allowed
to stand in the way of the 50 per cent cuts in strategic weapons and he referred
to "military conflicts in regions of the developing world" as an area where
there has been no progress.

He suggested that the tough line he adopted towards Moscow when he took office
had put US-Soviet relations on a realistic basis and had opened the door to
wider agreements.  "Candour and realism about the Soviets have helped the peace
process," he said.

In what appeared to be a cautiously positive response to some of the new
domestic initiatives taken by Mr Gorbachev, Mr Reagan said he detected "movement
and progress" from Moscow in response to the four-part negotiating agenda which
the US has adopted.

At the summit in Iceland he said "Mr Gorbachev and I took some significant steps
forward" on arms control.  He cited increases in emigration figures from the
Soviet Union and the release of political prisoners, including the Scientist Dr
Andrei Sakharov, as evidence of "positive developments" in human rights.

In a comment apparently designed to try to shore up waning support for his
policies in Central America, Mr Reagan said that Soviet bloc military assistance
to Nicaragua "reached an unprecedented billion dollars" last year adding "Soviet
conduct here will be a litmus test of our relationship."

There was no hint in these remarks that Mr Reagan will hold back from an INF
agreement because of such problems.  He did, however, make it clear that, in
response to allied concerns, "We cannot permit the benefit of the reduction in
longer range INF missiles ...  be undermined or circumvented by continuing
imbalance in shorter-range INF missiles in which the Soviets have a huge
advantage."

European governments have expressed concern that Moscow could be left with both
a conventional and a shorter range nuclear missile advantage in Europe if INF
missiles are reduced to zero without addressing the issue of shorter range
missiles.

LANGUAGE: ENGLISH

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                              51 of 614 DOCUMENTS

                        Financial Times (London,England)

                            April 14, 1987, Tuesday

Arms Sales Probe Close To Tracing Profits

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 308 words


Investigators are close to tracking down the secret transfer of profits from US
arms sales to Iran to the Nicaraguan Contra rebels, according to several reports
in Washington.

Bank records indicate that more than Dollars 1.5 m (926,000 Pounds (pds)) was
funnelled through a dummy corporation in Panama to a secret network that
supplied arms to the Contras from November 1 1985 to late last year.

The transfers occurred during Congress's ban on all US military aid to the
Contras and they match the period when President Reagan authorised controversial
arms sales to Iran.

Early next month, the two Congressional select committees are to open public
hearings on the Iran contra affair.  The inevitable publicity and fresh
disclosures are bound to affect Mr Reagan's partial political recovery since the
Tower Commission report and his shake-up of senior White House staff.

The Philadelphia Inquirer reported yesterday that federal investigators believe
that the profits from the Iran arms sales were moved through Swiss banks to a
Panamanian company, Amalgamated Commercial Enterprises.  It was used to buy and
maintain three cargo planes and pay crewmen.

Detailed summaries of Amalgamated's bank transactions, and wire transfers from
Switzerland, were obtained by the Inquirer's reporters who said that the two
Panamanian dummy companies were called Udall Research and Albon Values.  These
firms were mentioned by Lt-Col Oliver North, the sacked White House aide, in a
memo.

Separately, Mr Lawrence Walsh, the independent counsel investigating the Iran
Contra affair, is progressing in his attempt to secure indictments.

According to news reports, his efforts have been spurred by the welter of memos
which were unwittingly left in a White House computer by Lt-Col North and the
former security adviser Rear Admiral John Poindexter.

LANGUAGE: ENGLISH

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                              52 of 614 DOCUMENTS

                        Financial Times (London,England)

                            April 23, 1987, Thursday

Secret Army Account Linked To Iran Arms Sales

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 415 words


The Pentagon has admitted that a secret army unit, disbanded in 1983, opened an
unauthorised Swiss bank account which may later have been used illegally to
finance arms shipments to the Nicaraguan Contra rebels.

A senior Pentagon official said evidence suggested that Lt Col Oliver North and
former Maj Gen Richard Secord - two central figures in the Iran scandal - were
among those who had access to the account at Credit Suisse bank.

The disclosure could provide clues to the central mystery in the Iran-Contra
affair: how were millions of dollars of profits from US arms sales to Iran
diverted via Swiss banks to the Contra rebels.

It could also prove embarrassing for Mr Caspar Weinberger, the US Defence
Secretary, who has distanced himself vigorously from the scandal by flatly
stating he opposed US arms sales to Iran.

The army unit - called Yellow Fruit - operated as a front company performing
counter-intelligence tasks in Central America but was shut down in 1983
following allegations of financial misconduct against several members.

A Pentagon official said that the Swiss bank account was "unauthorised and
highly unusual." Its existence was overlooked during a subsequent army
investigation and in the face of persistent inquiries by CBS News.  Pressure
from American reporters led to a background briefing on Tuesday afternoon by a
senior Pentagon official who declined to be named.

CBS reported that Dollars 2.5 m was withdrawn from the secret account one day in
1985 and Dollars 75,000 was used to charter a freighter that carried arms to the
rebels - at a time when direct and indirect US aid was banned by Congress.  It
is not clear if the money was from US sources but CBS reported that the names of
Lt-Col North and Mr Secord appeared on the account.

The joint congressional select committees - due to begin public hearings in two
weeks' time - have been blocked from uncovering the Iran-Contra money trail by
Swiss banking laws an Fifth Amendment rights against self-incrimination.

The Senate select committee is considering offering limited immunity against
prosecution to Mr Secord which would compel him to testify.  The immunity would
mean Mr Lawrence Walsh, the court-appointed special prosecutor pursuing a
criminal investigation into the Iran scandal, would have to find evidence
independent of Mr Secord's testimony to prepare an indictment against him.

Granting Mr Secord even such limited immunity would be a climbdown for the
committee.

LANGUAGE: ENGLISH

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                              53 of 614 DOCUMENTS

                        Financial Times (London,England)

                            April 25, 1987, Saturday

Breakthrough In Iran Arms Sale Investigation

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 344 words


Congressional investigators have made a break-through in their inquiry into the
Iran arms scandal, tracing how several million dollars from secret US weapons
sales from Iran were diverted to the Nicaraguan Contra rebels.

Two select congressional committees have obtained Swiss bank records in Paris
which confirm that some of the arms profits were, as long suspected, illegally
diverted to the Contras.

Senator Daniel Inouye, the Democrat chairman of the Senate select committee and
a member of the special Watergate panel 14 years ago, said: "I think we have
enough in documents to follow a clear paper trail."

His Republican vice-chairman, Senator Warren Rudman, said he was optimistic that
the committee - which is working in tandem with a House panel - will have pieced
together the financial jigsaw puzzle before joint public hearings start in ten
days.

The key witness supplying the Swiss bank records is Mr Albert Hakim, an Iranian
businessman and partner of another leading player in the Iran-Contra affair, the
retired former Air Force Major General Richard Secord.

Mr Hakim, who was granted limited immunity by the congressional panels in
exchange for testimony, apparently handed over Swiss bank records and other
material.  This had proved a serious obstacle since Mr Secord had refused to
co-operate with the investigators, citing his rights.

This had led to an unsuccessful court action by the congressional panels and the
threat of a protracted legal battle over the bank record.

It will, however, not please Mr Lawrence Walsh, the independent counsel seeking
criminal indictments against leading figures in the affair.  Mr Walsh is not
allowed to use any of the evidence given by immunised witnesses against them,
unless he can show he obtained the evidence elsewhere.

Mr Rudman, indicating frustration with Mr Walsh's regular pleas not to grant
immunity lest his investigation is prejudiced, said: "There are too many
important issues facing the country for the American people to wait while (his)
investigation goes on ad nauseam."

LANGUAGE: ENGLISH

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                              54 of 614 DOCUMENTS

                        Financial Times (London,England)

                             April 27, 1987, Monday

Switzerland;
The Struggle To Stay Ahead

BYLINE: William Dullforce, Geneva Correspondent

SECTION: SURVEY; Pg. I

LENGTH: 1446 words

HIGHLIGHT:
Despite the vulnerability of a small open economy Switzerland is remarkably
successful in staying ahead of other advanced industrial nations but such
success creates its own problems, says William Dullforce, Geneva Correpondent


The Swiss sometimes seem to be doomed to success.  How otherwise can one explain
how 6 m people in the largely rocky fastness without much in the way of natural
resources can achieve, and sustain through the upheavals in the world economy in
recent years, the West's highest per capita income?

Consider their present situation.  Gross domestic product is forecast to grow by
just over 2 per cent this year - modest but about average for the advanced
industrial countries and not at all bad after the 4 per cent of 1985 and 2.5 per
cent last year.

More important, compare unemployed, inflation and interest rates with those of
other countries whose economies are growing at a similar pace.  In Switzerland,
inflation and unemployment are below 1 per cent, interest rates are the lowest
in Europe and, one might add, the current account surplus has been over 5 per
cent of GDP for the last two years.

However, in the country of Zwingli and Calvin, the great Protestant reformers,
every good Swiss knows that there is no paradise on earth.  They watch the
underside of their success and stress the vulnerability of a small, open economy
to impulses and shocks from the bigger world outside.

Currently, a lot of them worry about the inhibiting effect the strong Swiss
franc will have on their exports and forecasters are downbeat about propsects
for 1988, when consumer spending as well is expected to taper off.

Concern has mounted in recent months, and there has been much debate, about
relations with the European Economic Community.  The 12 all but surround
Switzerland, take over half its exports and are moving towards a single,
internal market and closer technological co-operation among themselves.  Berne
worries about being shut out from developments of such vital interest to
Switzerland.

Hard businessmen and materialist as they may be, the Swiss are sensitive, in a
pragmatic way, about their image abroad.  Switzerland's exposure to the glare of
the European media and to the anger of governments on the pollution of the Rhine
last November after a fire at a Swiss chemical warehouse sent a long-lasting
tremor through the nation from the Government down.

Coming so soon after the accident to the Soviet nuclear reactor at Chernobyl,
the ecological disaster on the Rhine has reinforced the "Green" factions within
Swiss politics and revived public concern about the social limits to growth.  To
judge by the results of recent cantonal elections in Zurich and municipal
elections in Geneva, this development could even cause some surprises in the
Federal parliamentary elections expected next October.

In the financial field, Swiss authorities and the big banks have been showing
greater readiness to co-operate with foreign governments and institutions to
prevent "dirty money" being hidden in Switzerland and to counter crime and fraud
abroad.

As recent events have shown, in spite of its well-documented tendency to
preserve political patterns and to resist change, Swiss society is not
immutable.  Flexibility within a conservative set of values must provide at
least a partial explanation for its economic success.

In its last two annual economic surveys of Switzerland the secretariat of the
Organisation for Economic Development and Co-operation (OECD) analysed two other
aspects, the labour market and the financial sector, in trying to fathom the
secret of this success.

Switzerland employs a higher proportion of foreigners than any other OECD
country except for Luxembourg.  It has become commonplace that the Swiss were
able to absorb the oil price shocks of the 1970s more effectively and to keep
down unemployment, because they sent home three-quarters of their "guest
workers."

Recent research, backed by the OECD analysis, partially debunks the idea.
Though the dismissal of foreign workers was a significant factor after the 1973
oil price surge, it was much less evident after 1978 when the policy of
assimilating (carefully selected) foreigners by issuing permanent work permits
had set in more strongly.

Economic analysts now attach more weight to other elements, such as the
relatively low level of trade union membership, a long tradition of "labour
peace" dating back to an agreement of 1937 and, above all, to decentralised wage
negotiating at the company level.

In contrast to most of its other members, the OECD found, wages in Switzerland
had reacted sensitively to changes in both productivity and terms of trade.
Wage-setting is flexible above a centrally negotiated minimum.

Managements lay off workers, put them on short time and, in the last resort,
sack them when faced with slowdowns or loss of demand but their relationship
with the employees is rarely confrontational.

Another myth exposed in the latest OECD report is that Switzerland's prosperity
is based on a constant influx of foreign capital seeking a safe tax haven.
Switzerland is undoubtedly a turntable for expatriate funds administered by
Swiss banks and mostly placed back abroad, but the OECD pointed to the country's
high net capital export.  The crucial element is strong Swiss domestic savings.

The Swiss financial system, the OECD concluded, had contributed to economic
growth to an extent not experienced in any other country.  Moreover, Swiss
banking won the OECD's accolade for its "remarkable adaptability" to the
challenge of financial deregulation abroad and the internationalisation of
financial markets.

Recently, however, senior executives of all the three big banks, Union Bank of
Switzerland, Swiss Bank Corporation and Credit Suisse, have been crying 'ware,
suggesting that innovation and the quest for new financial instruments are being
carried to excess.  None of the Big Three raised their shareholders' dividends
this year.

Foreign attention, apart from that of the OECD, has focused over the past year
on the use of Swiss banks revealed in practically all recent financial scandals
- the pelf allegedly salted away by ex-presidents Marcos and Duvalier, the
Iran-Contra affair that shook the Reagan administration, the David Levine and
Guinness insider-trading cases.

These "Swiss connections" are frequently cited as showing the murkier underbelly
of the Swiss financial centre.  Over the past couple of years the Swiss have
been steadily modifying laws, treaties and practices to remove the tarnish while
retaining the essence of their banking secrecy.

Secrecy rests on two pillars: it is a penal offence for a bank employee to
disclose information about a client's business and magistrates cannot order
banks to hand over inforamtion, unless it has been shown that the matter under
investigation concerns a criminal offence.

When a foreign authority asks for legal help, the offence must be criminal under
both the Swiss code and the laws of the country concerned.  Tax avoidance is not
a criminal offence in Switzerland.

The convention de diligence, the agreement under which the Swiss banks undertake
to monitor the origin of funds placed with them, is being reinforced as a
barrier to the entry of dirty money.

An insider trading law is on its way through parliament and the Swiss justice
department is about to agree in an exchange of letters with the Securities and
Exchange Commission (SEC) of New York that in certain circumstances information
can be passed from Switzerland to facilitate investigation of civil fraud cases.

These adjustments have been prompted by the integration of Swiss banking into
the global financial market.

Industrialists and bankers fear that the impulsion given to "Green" sentiment in
Switzerland by the Chernobyl nuclear disaster and the chemical pollution of the
Rhine may threaten the efficacy of this twin power house.

The pollution of the Rhine was an accident where hundreds of thousands of fish
and eels died.  The river will be impoverished in flora and fauna for years but
no human life has been lost.

Sandoz, the chemicals company whose warehouse was burnt down, and the Swiss
Government quickly acknowledged their moral and financial responsibility.  The
Swiss Chemical Industries Association says its members will raise from 10 to
around 15 per cent of the proportion of investments devoted to safety and
environmental protection.

These extra costs, it might be argued, will weaken the international
competitiveness of the giant Swiss chemical and pharmaceutical groups.  The
Swiss Government, which took a frank and conciliatory position in European
discussion of the Rhine disaster, is now pressing for wider international
agreement on improved saftey norms.

Swiss handling of the matter continued to reconcile principle with practical
considerations.

LANGUAGE: ENGLISH

GRAPHIC: Picture Hydro-electric scheme in the Ticinese Alps, characteristic of
the Swiss amalgam of modern industry and a landscape fit for tourists; Map, no
caption

                   Copyright 1987 The Financial Times Limited


                              55 of 614 DOCUMENTS

                        Financial Times (London,England)

                            April 28, 1987, Tuesday

Messe's Business Deals Under Fire

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 481 words


Mr Ed Messe, the US Attorney General, who is a close friend of President Ronald
Reagan, has become embroiled in a series of controversies surrounding his
private business affairs and his role in the official Iran arms scandal
investigation.

Mr Messe's difficulties, which are being given a full airing in the US Press,
are likely to distract the Reagan Administration further as it tries to rebuild
its image in the wake of the Iran affair.

Under scrutiny is Mr Messe's involvement with a New York-based defence
contractor, Wedtech, now the subject of numerous criminal investigations for its
alleged payments to politically connected law firms and consultants.

Wedtech won a major US Army contract in 1982 when Mr Messe served as a top White
House adviser to the President.  Mr Messe admitted this month that he ordered a
review in 1982 that led to the White House intervention on Wedtech's behalf.

The Dollars 30 m contract, vital to establishing Wedtech's record as a Pentagon
supplier, helped it go public a year later.  One of Mr Messe's close friends, Mr
Bob Wallach, a lawyer, served as adviser to Wedtech and later was given options
on several hundred thousand dollars of stock in the company.

This month, it was disclosed that Mr Wallach introduced Mr Messe to a San
Francisco investment adviser, Mr Franklyn Chinn, who later set up a "blind"
partnership with Mr Messe to invest Dollars 60,000 of his personal finances.
About the same time, in April 1985, Mr Chinn became a consultant to Wedtech and
received stock options in the company.

A court-appointed independent counsel is investigating possible criminal charges
against Mr Lyn Nofziger, one of Mr Meese's colleagues at the White House in
1982, who also became a consultant to Wedtech, a minority business in the
run-down south Bronx, New York.

Separately, Mr Meese is under for fire for his role in the initial investigation
of the Iran arms scandal.  Mr William Webster, than FBI director, and now
President Reagan's nominee to head the CIA, has told congress that Mr Meese
asked him on October 30 last year to delay any inquiry into a Miami-based
charter airline, Southern Air Transport, which was involved in a secret and
possibly illegal network to supply the Nicaraguan Contra rebels.

Mr Meese's initial investigation into the Iran-Contra affair has also been
criticised.  He failed to secure documents in the office of Lt Col Oliver North,
the sacked White House aide, and he did not give either Col North or Rear
Admiral John Poindexter a warning of their rights to silence.  Mr Meese had
responded by saying that he did not consider his talks with either men an
investigation, nor did he suspect any criminal wrongdoing.

He has also suffered money problems: his appointment as Attorney General in 1984
was held up for months while an independent counsel investigated his financial
affairs.

LANGUAGE: ENGLISH

GRAPHIC: Picture Messe, Reagan's friend

                   Copyright 1987 The Financial Times Limited


                              56 of 614 DOCUMENTS

                        Financial Times (London,England)

                           April 29, 1987, Wednesday

Nominee For CIA Recalled To Testify

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 284 words


Mr William Webster, the FBI director and President Reagan's nominee as head of
the CIA, has been recalled to testify before the Senate Intelligence Committee
on FBI investigations of assistance to the Nicaraguan Contra rebels.

The recall is unlikely to affect Mr Webster's chances of confirmation by the
Senate.

Mr Webster, however, wanted to avoid a third day of public questioning, expected
to focus on allegations that Lt-Col Oliver North, the sacked White House aide,
received information on the bureau's 1985 Miami investigation into gun-running
and mercenary recruiting for the Contras from Florida.

Last month, President Reagan's first nominee for the EIA post, Mr Robert Gates,
was forced to withdraw in the face of criticism from senators on the committee.

They questioned his role in the Iran-Contra affair, suggesting that in his role
as deputy director of the CIA he might have shaded intelligence briefings on
Iran to match some US officials' desire to sell weapons to Tehran.

Mr Gates, nominated to succeed Mr William Casey, who is suffering from brain
cancer, denied the charges.

Mr Webster's present difficulties show how federal agencies and their top
officials are all, to varying degrees, tainted by the Iran-Contra affair.

In his testimony earlier this month, he disclosed that he had been informed as
early as October 30 last year that Lt Col North could be the subject of a
criminal probe related to his role in supplying arms to the Contras.

But, Mr Webster said, he agreed to a request from Mr Ed Meese, Attorney General,
to suspend an FBI investigation involving a Miami-based charter airline,
Southern Air Transport, with which Lt Col North was closely linked.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            April 30, 1987, Thursday

Iran-Contra Arms Scandal Charge Admitted

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 48

LENGTH: 529 words


The first person to face criminal charges in the four-month US investigation
into the Iran arms scandal pleaded guilty yesterday to conspiring to defraud the
US Government.

Mr Carl "Spitz" Channell, a concervative Republican fund raiser and former West
Virginia motel operator, told US District Judge Stanley Harris he had conspired
with Lt Col Oliver North, the dismissed White House aide, and Mr Richard Miller,
president of a public-relations company.

Mr Channell also agreed to co-operate with the continuing investigation.

Mr Channel pleaded guilty to claiming tax-exempt status while raising more than
Dollars 2 m (1.2 m Pounds (pds)) of private contributions for the Nicaraguan
Contra rebels.

The move represents a breakthrough in Mr Walsh's inquiry into secret US arms
sales to Iran, the diversion of profits to aid the Contras, and a private Contra
aid network set up to circumvent a Congressional ban on direct and indirect US
military aid.

Col North's activities as a fund-raiser and his links to Mr Channell's group,
the National Endownment for the Preservation of Liberty, are an important aspect
of Mr Walsh's investigation and the public Congressional hearings, which are to
open next week.

Mr Channell, 41, became a celebrity in the past three years, raising millions of
dollars from individual donors.  President Reagan and Vice-President George Bush
have praised his efforts and on several occasions the President met the
contributors at the White House.

In a separate and potentially significant development, the Democratic
Congressional campaign committee has filed a complaint with the Federal Election
Commission that Mr Channell used tax-exempt status to help finance Republican
candidates who backed the Contras during the 1986 mid-term elections.

It is unclear if there is a link between Mr Channell's fundraising for the
Republican Party and the Contras,but if proven it would add a new dimension to
the Iran-Contra affair.

Mr Channell was charged in the US District Court in Washington yesterday with
conspiring to use his organisation for the improper purpose of soliciting
"contributions to purchase military and other types of non-humanitarian aid for
the Contras."

Mr Channell built a network of at least nine tax-exempt organisations and
political action committees as part of his effort to help the Contras during the
Congressional ban.  Most of the money was from a very small number of elderly
donors.

By pleading guilty to a single count of conspiracy, Mr Channel faces a maximum
sentence of five years anda fine of Dollars 250,000.

The charge said that Mr Channell and another government official met in March
1986 with a potential contributor in Washington.  Three days later the
contributor sent a Dollars 130,000 cheque to Mr Channell.

In April another contributor wired Dollars 470,000 to a bank account of the
Endowment.  On the same day, the same donor transferred about Dollars 1.15 m
worth of stocks to a brokerage account the Endowment ran.

Mr Miller worked in President Reagan's 1980 campaign and was later appointed to
a job in the Agency for International Development, the federal foreign aid
agency.

LANGUAGE: ENGLISH

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                              58 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 1, 1987, Friday

Fall Of A Fund-Raiser Friend Of The Mighty

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 530 words


At his peak, Mr Carl "Spitz" Channell, was one of the best known professional
fund raisers in Washington.  Slick, and well manicured, Mr Channell visited the
smart hotels, mixed with the conservative rich and ran one of the most effective
operations for raising funds for the Nicaraguan Contra rebels during the 1984 to
1986 congressional ban on official US military aid.

On Wednesday, Mr Channell pleaded guilty to tax fraud and implicated the sacked
White House aide Lieutenant Colonel Oliver North in a wider conspiracy to
defraud the US Government.

His guilty plea not only cast doubt on the legality of his own operations as a
private fund raiser, but it raises questions about the whole private network -
openly supported by President Ronald Reagan - which was set up to blunt the
effect of the congressional ban.

The relationship between the White House and the fund-raising machine set up by
Mr Channell is now one important aspect of a criminal investigation led by Mr
Lawrence Walsh, the court-appointed special prosecutor and the joint
congressional committee which will open public hearings into the Iran-Contra
affair next Tuesday.

Mr Channell, a former West Virginia motel operator served a four-year
apprenticeship at the National Conservative Political Action Committee where he
learned the art of fund-raising.  In 1983, he set up his own operation which
advertised anti-communist causes and listed such names as the National Endowment
for the Preservation of Liberty and the American Conservative Trust.

Mr Channell's organisation's main attraction went beyond backing conservative
causes.  Because they were set up as an endowment, they enjoyed charitable
status - and therefore allowed donors to write off their contributions against
tax.  For rich private individuals - whatever their political affiliation - this
must have been an added incentive.

A second attraction was that Mr Channell enjoyed close ties with certain key
officials inside the White House who were able to arrange meetings - sometimes
with the president - for some of the individual private donors.

The New York Times reported yesterday, quoting confidential documents, that Mr
Channell, employed two former White House officials who used their connections
with high administration officials, including President Reagan, to arrange such
meetings.

One of those officials was Mr Lyn Nofziger who is already under investigation by
a special prosecutor on a separate matter involving improper lobbying activities
on behalf of a New York defence contractor.

Mr Channell's activities during the 1986 election campaign are under separate
scrutiny by the Federal Election Commission.  The Democratic party campaign
committee has alleged that Mr Channell used his organisations to provide money
to candidates backing the Contra rebels in the election.

The Channell case has brought into focus the financial dimension to the
Iran-Contra affair.  The investigators are now trying to discover the
involvement of administration officials in the private aid network, whether tax
and election laws are violated, and whether statutes on neutrality and arms
exports were contravened.

LANGUAGE: ENGLISH

GRAPHIC: Picture Carl "Spitz" Channell, influence in high places

                   Copyright 1987 The Financial Times Limited


                              59 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 2, 1987, Saturday

Webster Baced By Senate Committee

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 171 words


Mr William Webster, the FBI chief nominated by President Ronald Reagan as the
new head of the CIA, received a unanimous vote of approval from the Senate
Intelligence Committee yesterday.

But the Webster nomination - expected to be confirmed by the full Senate - has
been clouded by new claims in the Iran-Contra scandal indicating that President
Reagan was informed about the private and possibly illegal aid network for the
Contra rebels.

Mr Webster said in evidence to the Senate committee that the former White House
aide, Lt-Col Oliver North - interviewed by an FBI agent about Contra
fund-raising activities in June 1985 - had said he discussed a large private
donation with both President Reagan and his former National Security Adviser, Mr
Robert McFarlane.

The White House yesterday disputed the new evidence suggesting the President
knew more about possibly illegal aid to Nicaraguan Contra rebels than he has
admitted.  "The President was never advised of this matter," a White House
spokesman said.

LANGUAGE: ENGLISH

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                              60 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 5, 1987, Tuesday

War Veteran Courts Danger Over Irangate

BYLINE: Lionel Barber

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 481 words

HIGHLIGHT:
Lionel Barber profiles a key figure in the US arms scandal


Richard Secord, the retired air force major general scheduled to be the first
witness in the Iran-Contra hearings which open today, is a 55-year-old former
Vietnam combat pilot who has spent almost half his life engaged in covert
operations.

A short, squat figure with an explosive temper, he is one of a handful of
figures intimately involved in both aspects of the Iran-Contra affair: the
secret US arms shipments to Iran and the private aid network for the Nicaraguan
Contra rebels.  His testimony could be crucial to prising open the scandal.

Until recently, Mr Secord, now an international arms dealer, had remained
silent, invoking his fifth amendment rights against self incrimination.  Now he
is willing to testify before Congress even without a granting of limited
immunity.  Why the change of mind?

One easy explanation is that he had little choice following the congressional
granting of immunity to his business partner and Iran-Contra confederate, Mr
Albert Hakim.  Once Mr Hakim agreed to talk, Mr Secord may have felt little was
to be gained in holding out.

A second, more intriguing theory lies in his defiant character.  After
graduating from West Point in 1955, he sought some of the most dangerous and
daring missions, during his military career.  He flew more than 200 secret
combat missions in Vietnam, he helped the CIA conduct its covert war in Laos
against the Pathet Lao tribesmen in the mid-1960s; and he advised the Shah of
Iran on how to build his air force.

He seemed to be on a fast track to the top until 1981 when newspaper and
television revelations linked him to the rogue CIA agent, Mr Ed Wilson, now
serving a 40-year jail sentence for selling explosives to Col Muammer Gadaffi.

Though he denied any wrong-doing, Mr Secord knew Wilson socially, flew his
aircraft, and sold him a house.  He was also a member of a CIA old boys' network
of Wilson acquaintances who excelled at exploiting former public service for
private profit, often in the international arms business.

Mr Frank Carlucci, then deputy Defence Secretary, and now President Reagan's
National Security Adviser, offered to lift his suspension in 1983, but Mr Secord
chose to retire and joined Stanford Technology, a Silicon Valley company which
specialised in sophisticated electronics and related weaponry.  According to a
book by the best-selling author, Mr Peter Maas, Stanford - run by Mr Hakim - was
also linked to Wilson, though Mr Secord has denied this.

Mr Secord knew Col Oliver North, the sacked National Security Council aide,
through their joint successful effort to lobby Congress to approve the sale of
the Boeing Awacs airborne early warning system.  Knowing his continuing close
connections with the Reagan Administration after his retirement, it is likely
that he will argue that his roles in the Iran and Contra policies were approved
from on-high.

LANGUAGE: ENGLISH

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                              61 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 5, 1987, Tuesday

The Unmaking Of Mr Reagan, Part Two

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Editorial; Pg. 22

LENGTH: 1516 words


The Congressional hearings into the Iran-Contra scandal, which open before
television cameras on Capitol Hill today, signal a dramatic new phase in the
affair.

Three months of live broadcasts will create a natural cast of heroes and
vilains: the intrepid House and Senate interrogators, the shapely White House
shredder, Fawn Hall, two star witnesses - Lt Col Oliver North and Rear Admiral
John Poindexter, and a motley band of former CIA agents, freelance diplomats and
international arms dealers, who make up this bizarre and complex tale.

Comparisons with the Watergate hearings of 14 years ago are inevitable, if
misleading.  Unlike his Republican predecessor, Richard Nixon, President Ronald
Reagan has co-operated fully with the various investigations, even agreeing to
hand over extracts from his handwritten diary.  Despite some doubts about the
role of Edwin Meese, US Attorney General, there is little evidence of a cover-up
of the magnitude which drove Mr Nixon from office.

The nature of the scandal, too, is very different.  This is no domestic abuse of
executive power aimed at rigging a presidential election.  The essence of
Irangate is how a small group of US Government officials created a secret and
private foreign policy which bore little resemblance to its official public
version.  How this happened - and how to prevent it recurring - is the challenge
of the joint House and Senate inquiry.

When it first broke in early November, the Iran affair appeared to be a colossal
mis-judgment on the part of Mr Reagan and his advisers.  By selling arms
secretly to the Iran Government, the US broke its long-standing policy of
neutrality in the Iran-Iraq war and undercut a commitment to its people and to
its allies not to negotiate with nations sponsoring terrorism.

It became a scandal three weeks later when Mr Meese announced, after a brief
informal inquiry, that up to Dollars 30 m (18 m Pounds (pds)) of profits from
the arms sales had been diverted to the Nicaraguan Contra rebels, thereby
breaching a congressional ban on all direct and indirect US military aid.

The instant sacking of Col North, the White House aide identified as running the
undercover operation, coupled with the resignation of his mentor, Admiral
Poindexter, President Reagan's national security adviser, resulted in four
separate inquiries, two of which are complete.

The senate intelligence committee report showed how the Reagan Administration,
with the connivance of the Israeli Government, traded arms for American hostages
held by pro-Iranian extremists in Lebanon.

The Tower Review Board - set up by President Reagan to examine the workings of
the National Security Council - produced, at the end of February, a 200-page
report which portrayed a detached president, badly served by his advisers
pursuing a rash and ill-conceived Iran policy.

Today's start of the House-Senate hearings will give fresh impetus to the affair
which will last well into the autumn, when a joint committee report will be
published.  Even then, the final chapter remains to be written because a
court-appointed independent counsel, Lawrence Walsh, is pursuing a separate
criminal investigation, which could result in indictments against key players in
the scandal.

The Tower board was able to draw the Iran policy in sharp detail.  But in the
few weeks available, the three-strong panel, led by the former Texas Republican
senator, John Tower, was unable to give a clear picture of how the arms sales
profits were diverted to the Contras.

After three months of inquiries, which have seen 200 people subpoenaed and more
than 100,000 pages of documents locked up under armed guard in committee rooms
on Capitol Hill, congressional investigators are now confident that they have
traced the money trail and the main figures involved.

So far, attention has focused on the tall marine with the toothy grin, Oliver
North.  A Vietnam war hero with a taste for the role of globe-trotting
troubleshooter, Col North was undoubtedly the Administration's point man in the
undercover effort to keep arms flowing to the Contras during the 1985
congressional ban.

Yet this was well documented.  The New York Times described the dubious
activities of a White House-based aide in the summer of 1985, but witheld the
name on national security grounds.  He was later named as Col North by the
Washington Post.  Senator John Kerry, a Massachussetts Democrat, produced still
more damaging evidence in a detailed report last year.  But such was President
Reagan's political standing, that his opponents and the press failed to make any
impact.

Less well known was how Col North doubled up as hostage negotiator and arms
supplier to Iran (though a syndicated Jack Anderson and Dale van Atta column on
June 29 1986 stated: "We can reveal that the secret negotiations over arms
supply and release of American hostages have involved members of the National
Security Council and a former official of the CIA")

But congressional investigators have already discarded the popular theory that
the Iran-Contra operation was run by a power-hungry marine from a basement in
the White House.  Siphoning profits from the arms sales to the Contras required
a sophisticated financial brain, able to keep track of the millions of dollars
flowing through Swiss banks, offshore companies and private arms dealers'
accounts.

The two obvious candidates for Congressional scrutiny are the retired former air
force general, Richard Secord, who, with his Iranian business partner Albert
Hakim, is well known in the international arms trade.

Mr Hakim made his entrance to the story in 1986 as an interpreter for Co North
in his officially blessed meetings with Iranian Government officials.  But he is
also the business brain in Democracy Inc, the grandly named umbrella project set
up four years ago to supply arms to the Contras and other anti-Communist groups
around the world.  Mr Secord, who in 1981 was a senior official in the Pentagon
working with Col North during the Administration's successful lobbying of
Congress to approve the sale of an Awacs airborne early warning system to Saudi
Arabia, also played diplomat and arms dealer.

On the periphery, at least for the moment, are a string of former CIA agents who
glided in and out of the Iran-Contra operation.  According to the Tower Report,
it was a former CIA agent, Theodore Shackley, who first suggested - in a 1984
memo to the State Department - that the American hostages could be released for
money.

A second Shackley memo in the summer of 1985 contained a suggestion from the
Iranian arms dealer, Manucher Ghorbanifar (whom the CIA had attempted to recruit
five years earlier) that the ransom involved terms "other than money,"
presumably weapons.

Further members of the CIA "old boy" network who figure include Thomas Clines, a
disgraced former agent, and Felix Rodriguez, a Cuban Bay of Pigs veteran who
helped to establish a Contra aid network from the Ilopango air base in El
Salvador.

This begs the question of whether the CIA itself was heavily involved in the
Iran-Contra affair, notably through its then director of intelligence, William
Casey.  One striking thing about the Tower Report is the numerous memos from Col
North appealing for the CIA to take control.

"What we most need is to get the CIA re-engaged in this effort, so that it can
be better managed than it is now by one slightly confused marine Lt Col," he
wrote to Admiral Poindexter on June 10 1986.

One theory - expounded by William Safire of the New York Times - is that Mr
Casey, a fervent supporter of the Contra cause, knew that the only way to
circumvent Congress's ban on CIA involvement was to place the operation in
National Security Council hands, where the legal restrictions on covert
operations and Contra aid were far less clear.

Mr Casey, a brain cancer victim, is too sick to give his sworn testimony, which
leaves the agency exposed to speculation and criticism.  One of the key issues
in the Congressional inquiry will be whether - as in the aftermath of Watergate
- Congress instigates yet another debilitating purge of its intelligence
service.

A more immediate problem for the country is that the hearings will continue to
distract the Administration and push the 76-year-old President back on the
political defensive.  They are bound to affect Mr Reagan's hopes of securing
Dollars 105 m of funding for the Contra's in September and, by raising the
nagging question of competence, they could affect his chances of persuading the
Senate to ratify an arms agreement with the Soviets.

"More generally, the Iran-Contra affair and the numerous investigations will
help create some of next year's presidential election themes: honesty, integrity
and sound judgment in Government.  The could destroy one candidate,
Vice-President George Bush, and launch another - watch Democratic Senator Sam
Nunn of Georgia step into the limelight on the Senate select committee.  As Col
North once exclaimed to Admiral Poindexter: "This is the damnedest operation I
have ever seen."

LANGUAGE: ENGLISH

GRAPHIC: Picture, no caption; Picture, no caption; Picture, no caption; Picture,
no caption; Picture, no caption

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                              62 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 5, 1987, Tuesday

Wild-Card Walsh Plays His Hand

SECTION: SECTION I; Editorial; Pg. 22

LENGTH: 349 words


Lawrence Walsh, the 74-year-old court-appointed independent counsel leading a
criminal inquiry into the Iran-Contra affair, is the wild card in the pack of
investigations.

His team includes 23 associate counsel, 35 FBI agents and 11 Internal Revenue
Service officials.  Together they have already conducted 300 interviews,
reviewed hundreds of White House boxes of documents and 200,000 pages of CIA
memos.

His mandate is very broad, covering all aspects of the Iran arms sales and the
private Contra aid network.  But, because he is working under tight secrecy,
along with a grand jury, little is known of who his targets are and what charges
he might bring.  One area to be explored is the question of tax fraud involving
private donations to pro-Contra organisations.

Mr Walsh's job is to decide whether crimes have been committed and, if so, to
prove it.  His task differs, therefore, from the Congressional committees, which
have been set up to discover the truth on a matter of national importance and to
tell it to the American public.

He has clashed repeatedly with senators and congressmen over one issue: whether
to grant limited immunity to key witnesses to compel them to testify.  The
advantage is that it removes the Fifth Amendment right to silence (invoked by
Col North and Admiral Poindexter) and compels testimony.  The disadvantage is
that it may prejudice Mr Walsh's case.

Independent counsel cannot use evidence given under protected testimony, so Mr
Walsh has urged the committees to delay granting immunity.  The joint
congressional committees have partly complied, agreeing to an elaborate
timetable to call witnesses at staged intervals to give counsel maximum time to
prepare his criminal case.

Mr Walsh point out last week, in an interim report to Congress, that no
protected witness in Watergate who refused to plead guilty was successfully
tried and convicted.  But in a clear message that he means business, he filed
his first criminal charge: one count of conspiracy against the conservative
fund-raiser for the Contras, Carl "Spitz" Channell.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              63 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 5, 1987, Tuesday

US To Table Long-Range Missile Proposals

BYLINE: William Dullforce, Geneva

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 309 words


President Reagan said yesterday that the US would soon present a draft treaty at
the Geneva arms negotiations calling for a 50 per cent cut in long-range
strategic missiles.

The Strategic Arms Reduction Talks (Start) are due to resume in Geneva today.

In a White House statement, Mr Reagan said: "I am firmly convinced that a Start
agreement is within our grasp even this year if the Soviets are prepared to
resolve the remaining outstanding issues."

The statement, on the eve of today's opening of Congressional hearings into the
Iran/Contra arms deals, will be seen in part as an attempt to deflect attention
from Capitol Hill.  Mr Reagan's political advisers have also drawn up a busy
schedule for him over the next few weeks in an effort to ensure that the
hearings do not dominate the headlines.

The statement also appears to be aimed at depleting criticism that the White
House is putting insufficient emphasis on the broader issues of arms control.

The President has been attacked for focusing so much attention on Intermediate
Nuclear Forces (INF) and shorter-range missiles in Europe and for seeking an
arms control accord covering missiles in Europe without linking the talks to a
reduction in the Warsaw Pact's conventional force superiority.

Mr Yuli Vorontsov, the deputy Soviet Foreign Minister, expressed a different
emphasis from President Reagan's statement as he arrived in Geneva for the
talks.  He was looking for a full-fledged treaty on medium-ranged missiles.

In the past two months both sides have tabled texts of a treaty eliminating INF
or medium-range missiles (1,000 km to 5,000 km) from Europe.  Moscow has been
pressing for an accord this year.

To underline the urgency, the INF negotiators resumed talks on April 23, two
weeks before the two other groups discussing strategic arms cuts and space
defence.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              64 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 5, 1987, Tuesday

Contra Scandal Hearings May Embarrass Reagan

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 592 words


Congress today opens three months of public hearings into the Iran-Contra affair
which threatens to eclipse President Reagan's partial political comeback and
uncover new evidence about the secret White House operation to arm the
Nicaraguan Contra rebels.

The joint House-Senate sessions - the most important congressional hearings
since Watergate - are likely to produce revelations embarrassing to President
Reagan and to other nations who gave money to the Contras during the
congressional ban on US military aid between October 1984 and October 1986.

Senator Daniel Inouye, chairman of the Senate Select Committee and a veteran of
the Watergate hearings 14 years ago, repeated this weekend that President Reagan
was more deeply involved in the Contra aid programme than he has admitted.

This is the view of most Americans, according to opinion polls over the past
five months.

The White House, sensing the danger to Mr Reagan's recovery, has sought to
create the impression of a newly invigorated leader who has most of the scandal
behind him.  The 76-year-old President intends to make several significant
domestic and foreign policy speeches in the next few weeks and will have a
high-profile trip to Venice to attend an international economic summit.

But Mr Reagan's busy image does not square with the detached role his advisers
are putting across when it comes to the Contra aid question.  Mr Reagan and his
advisers argue that the President was unaware that Reagan adminstration
officials led by Marine Lt Col Oliver North, the sacked White House aide, were
running an officially directed private aid network to arm the Contras during the
congressional ban.

On Sunday, a key player inthe Contra aid network, Mr Lewis Tambs, the former US
Ambassador to Costa Rica, said all actions were taken on specific orders from
government officials in Washington.  He cited an interagency group chaired by Mr
Elliot Abrams, Assistant Secretary of State, and attended by senior CIA officer
and Lt Col North.  The allegations were denied by spokesmen for the CIA and Mr
Abrams.

The Iran-Contra hearings are already putting pressure on the Administration to
come up with a modified policy on supporting the Contras in their armed struggle
against the leftist Sandinista Government in Nicarauga.

A key Congressional vote on whether to renew more than Dollars 100 m (59.9 m
Pounds (pds)) of military aid comes up in September.  Many Democrats, looking
towards next year's Presidential elections, would be loath to ditch the
anti-Marxist rebels but they would like to see more support for diplomatic
initiative to calm tensions in Central America.

On Sunday, President Reagan, speaking in the shadow of the Statue of Liberty in
New York harbour, again appealed for Contra aid, but shifted his emphasis from
military conflict and stressed the goals of free elections and democracy.  He
also spoke of economic aid and gave qualified praise to a peace plan pushed by
the Costa Rican President Oscar Arias - a deliberate attempt to rebuild a
pro-Contra coalition in Congress.

The congressional hearings will take their first testimony from Mr Richard
Secord, the retired air force general, who played a dual role in the Iran and
Contra part of the scandal, and from Mr Robert McFarlane, President Reagan's
former national security adviser.  They will give an overview of the affair.

Congressional investigators will then focus on the private aid network, the
money trail, the arms shipments to Iran, and the division of blame and
responsibility.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              65 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 6, 1987, Wednesday

Meese Faces Inquiry Into Links With Defence Group

BYLINE: Nancy Dunne, Washington

SECTION: SECTION I; Back Page; Pg. 48

LENGTH: 402 words


Mr Edwin Meese, the US Attorney General, is to face investigation by the Justice
Department, which he heads, for possible violations of US conflict of interest
laws.

Mr Meese is the third of President Ronald Reagan's former high-level aides to
come under legal scrutiny as Congress begins its highly publicised hearings on
the Iran-Contra affair.

Mr Michael Deever, a close friend of Mr Meese and of the President, has been
indicted for perjury, and Mr Lyn Nofziger, a political adviser of the President,
is under investigation for his lobbying efforts on behalf of Wedtech
corporation, a New York military contractor.

The investigations will focus on Mr Meese's links with Wedtech.  Of central
importance is a Dollars 60,000 (36,000 Pounds (pds)) investment Mr Meese made
with a financial consultant who he knew had links with the company.

Mr Meese's contacts with Wedtech, a Bronx-based defence contractor, began in
1982 when, as a presidential counsellor, he ordered a review that led to White
House intercession for the company and ultimately a Dollars 30 m army contract.

Wedtech filed for protection from its creditors under US bankruptcy laws last
September.  In February, four former company officials pleaded guilty to
inflating Wedtech's profits.

Mr Meese, one of President Reagan's oldest friends and political advisers, was
investigated by an independent counsel in 1985 before he was confirmed by the
Senate as Attorney General.  At that time he was cleared of charges of unethical
conduct.

The existence of the present inquiry, being conducted by the public-integrity
section of the US Justice Department, was disclosed in a letter to the chairman
of the Congressional judiciary committees by Mr James McKay, the independent
counsel investigating Mr Nofziger.

The chairman had asked Mr McKay to investigate Mr Meese's involvement with
Wedtech.  In the letter, the counsel replied that, although the jurisdiction of
his office, did not cover Mr Meese, the Justice Department was conducting "a
threshold inquiry" that might ultimately lead to the appointment of another
independent counsel to investigate Mr Meese.

Mr Meese has also been strongly criticised for his failure to secure evidence in
the early stages of the Irangate investigation and for his failure to remove
himself until April 8 from Wedtech investigations begun by New York and
Baltimore prosecutors last year.

LANGUAGE: ENGLISH

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                              66 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 6, 1987, Wednesday

Former CIA Chief Named In Iran-Contra Hearings

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 725 words


The first witness to the US congressional inquiry into the Iran-Contra arms
scandal yesterday implicated Mr William Casey, former Central Intelligence
Agency director, in the secret White House-sponsored operation to arm the
Nicaraguan rebels, writes Lionel Barber in Washington.

Accusing the Reagan Administration of betraying and abandoning him, Mr Richard
Secord, a former US Air Force major-general, told a joint House-Senate Panel
investigating the Iran-Contra affair that he understood the Administration knew
and approved of his activities.

He described meetings with Mr Casey and Mr Donald Gregg, the top national
security aide to Vice-president George Bush.  "Casey knew of the Contra
re-supply effort, was in favour of it, knew of its importance."

Mr Secord said documentary evidence before the inquiry also indicated that US
officials considered seeking aid in Britain for the Contras - in the form of
Blowpipe missiles from Short Brothers in Northern Ireland and pilots for
airlifting supplies.

Mr Secord also portrayed the private Contra aid network - set up to circumvent a
congressional ban on direct US military aid - as a shoestring operation forced
to solicit money from private donors and foreign countries.

However, he said the Administration had panicked last November when Mr Edwin
Meese, US Attorney-General, had discovered the diversion of the funds.  He
described Mr Meese's estimate of between Dollars 10 m (5.9 m Pounds (pds)) and
Dollars 30 m (17.8 m pds) as vastly inflated and said that only Dollars 3.5 m
was siphoned from the Iran arms sales to the Contras.

The former West Point graduate and Vietnam combat pilot said in a bitter opening
statement, that Mr Meese had rushed into giving a premature and grossly
inaccurate version of events.  Instead of waiting for an explanation "this
reasonable option was rejected and we were, instead, betrayed, abandoned and
left to defend ourselves."

Mr Secord said he had first been contacted about helping the Contras by Lt-Col
Oliver North, the National Security Staff aide, in July 1984.  The rebels were
short of arms and money and a congressional ban on US military aide was about to
go into effect.

Mr Secord said he had not wanted to become involved.  However, Lt-Col North,
stressing the threat to the rebel cause against the Marxist Sandinista
Government, persuaded him to arrange several multi-million dollar arms deals,
two involving a Canadian Arms company, Trans World Armament, and a former CIA
agent, Mr Thomas Clines.

Mr Secord said the proceeds from the Iran arms sales amounted to Dollars 30 m.
About Dollars 12.3 m had gone to the US Treasury but only Dollars 3.5 m had gone
to the Contras.  Up to Dollars 3 m had gone on what he called the Iran project,
a large amount had been used to buy what he called a small ship.

Mr Secord, in a new disclosure, said some money had been used to pay the
expenses of Drug Enforcement Administration officials involved in a covert
project to free US hostages in Lebanon.  He said such action had been endorsed
by the head of the DEA.

Mr Secord said his business partner, an Iranian American called Mr Albert Hakim,
had been involved in the Contra aid programme.  He had controlled a Swiss bank
acount and a Panamanian-registered company, Lake Resources, which were used as
the deposit-box both for private and public Contra donations and for money from
the Iran arms sales.

Mr Secord said he had decided not to take his cut on the arms deals because in
July 1985 he decided he wanted to resume his career in government.  He had left
under a cloud two years before because of his links with the former CIA agent Mr
Ed Wilson, now serving a 40-year jail sentence in the US for selling military
expertise to Col Maummar Gadaffi, the Libyan leader.

However, he remained heavily involved in the private aid network, which he
portrayed as a shoestring operation struggling to keep the Contra forces
together following the withdrawal of the CIA in late-1984 (in the wake of the
congresional ban).

He said his main job was to arrange an airlift operations for the Contras and to
put together a southern front against the Sandinistas.

In all, he said he had arranged for the purchase of just five aircraft and arms
purchases, some from East bloc countries, which were sent to Central America via
Portugal.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              67 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 6, 1987, Wednesday

Watergate Shadow Over Iran Arms Hearing

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 599 words

HIGHLIGHT:
Lionel Barber on the first day of House-Senate proceedings


It was Senator Howell Heflin, the former judge and senator from Alabama, who
captured the attention and the essence of the Irangate hearings which opened on
Capitol Hill yesterday.

"Yes, these hearings are about rogue elephants, Persian rug merchants, loose
cannons, soldiers of fortune, privateers, profiteers, believers, hostages and
Contras," he declared under the television lights in the Senate caucus room.

"But they're also about separation of powers, national security, fifth amendment
rights, allegations of misconduct ...  and, importantly, they're about the rule
of law."

Senator helfin's folksy wisdom consciously evoked the spirit of Sam Ervin, the
chairman of the Watergate hearings which, 14 years ago, were held in the same
Senate caucus room.  Indeed, Senator Heflin even quoted Sam Ervin, saying: "The
congressional investigation can be an instrument of freedom, or it can be
freedom's scourge."

It was inevitable that the shadow of Watergate should have fallen on yesterday's
House-Senate hearings, however substantial the differences between the two
scandals.  There were the old familiar faces; Senator Daniel Inouye, the Hawaii
Democrat who now chairs the Senate select committee; Congressman Peter Rodino,
who led the House impeachment proceedings against Richard Nixon, and Senator
Paul Sarbanes, the silver-haired sober legislator from Maryland.

Many members of the 26-strong panel of senators and congressmen - not a woman in
sight except on the crowded journalists' benches - were wary of pursuing the
Watergate analogy.  Most saw yesterday's hearing, the first of three months of
live broadcast proceedings, as the beginnings of a cathartic process.

Senator Inouye, a man with tons of gravitas, said: "These hearings do not
represent our democracy's weakness but its strength." But he warned: "This story
is not a pretty one."

Congressman Lee Hamilton, the Indiana Democrat who chairs the House panel,
agreed that "at the heart of what we do in these hearings is the proper working
of our system of government."

Other members, reflecting that 1987 is the 200th anniversary of the US
Constitution, told the television cameras that the joint congressional
bipartisan hearings were proof of the vitality of the US system of government
and the system of checks and balances between the legislature, the executive and
the judiciary.

Senator Warren Rudman, the burly New Hampshire Republican and vice-chairman of
the Senate select committee, citing congressional investigations of earlier
scandals such as Watergate and the 1923 Teapot Dome oil exploration scandal,
said: "The ability of Congress to discover the facts and expose improper conduct
in the executive branch is one of the key checks in the brilliant system of
checks and balances devised by the founding fathers of our country."

But Senator Rudman was an isolated figure within his own party at times.
Several Republicans, particularly on the House side, warned that the prolonged
investigation of the Iran-Contra affair could damage the US's reputation among
her friends and allies and distract from greater issues, such as arms control
and trade.

Senator William Cohen, the Maine Republican, spoke for many of his colleagues
when he said that part of the blame for the scandal lay in Congress's inability
and unwillingness to accept responsibility for stopping all aid to the
Nicaraguan Contra rebels.  "It was not only the American taxpayers who were
deceived by fraudulent charitable organisations ...  but the Contras themselves
who were filled with false hopes and empty promises."

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              68 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 6, 1987, Wednesday

Watergate Ghost Stalks Iran-Contra Hearings

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 526 words


It was Senator Howell Heflin, the former judge and Senator from Alabama, who
captured the attention and essence of the Irangate hearings which opened on
Capitol Hill yesterday.

"Yes, these hearings are about rogue elephants, Persian rug merchants, loose
cannons, soldiers of fortune, privateers, profiteers, believers, hostages and
Contras," he declared under the bright lights of the Senate caucus room.

"But they're also about separation of powers, national security, fifth
amendement rights, allegations of misconduct ...  and, importantly, they're
about the rule of the law."

Senator Heflin's folksy wisdom consciously evoked the spirit of Sam Ervin, the
chairman of the Watergate hearings which, 14 years ago, were held in the same
Senate caucus room.  Indeed, Senator Heflin even quoted Sam Ervin directly,
saying, "the Congressional investgation can be an instrument of freedom.  Or it
can be freedom's scourge."

It was inevitable that the shadow of Watergate should have fallen on yesterday's
House Senate hearings, however substantial the differences between the two
scandals.  There were the old familiar faces: Senator Daniel Inouye, the Hawaii
Democrat who now chairs the Senate select committee; Congressman Peter Rodino,
who led the House impeachment proceedings against Richard Nixon, and Senator
Paul Sarbanes, the silver-haired sober legislator from Maryland.

Many members of the 26-strong panel of senators and congressmen - not a woman in
sight except on the crowded journalists' benches - were wary of pursuing the
Watergate analogy.  Most saw yesterday's hearing, the first of three months of
live broadcast proceedings, as the beginning of a cathartic process.

Senator Inouye said: "These hearings do not represent our democracy's weakness
but its strength."

Other members, reflecting that 1987 is the 200th anniversary of the US
constitution, told the television cameras that the joint congressional
bipartisan hearings were proof of the vitality of the American system of
government and the system of checks and balances between the legislature, the
executive and the judiciary.

Senator Warren Rudman, the burly New Hampshire Republican and vice-chairman of
the Senate select committee, citing congressional investigations of earlier
scandals such as Watergate and Teapot Dome, said "the ability of Congress to
discover the facts and expose improper conduct in the executive branch is one of
the key checks in the brilliant system of checks and balances devised by the
founding fathers of our country."

But Senator Rudman was an isolated figure within his own party at times
yeserday.  Several Republicans, particulary on the House side, warned that the
prolonged investigation of the Iran Contra affair could damage America's
reputation among its friends and allies and distract from greater issues such as
arms control and trade.

Senator William Cohen, the Maine Republican, spoke for many of his colleagues in
the Republican Party when he said that part of the blame for the scandal lay in
Congress's inability and unwillingness to accept responsibility for stopping all
aid to the Nicarguan Contra rebels.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              69 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 6, 1987, Wednesday

North Immunity

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 53 words


Congressional investigators probing the Iran-contra scandal granted fired White
House aide Lt Col Oliver North limited immunity from prosecution to compel his
testimony.  Lt-Col North, viewed as the key figure in the scandal, has
repeatedly refused to testify, citing his right against possible
self-incrimination.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              70 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 7, 1987, Thursday

US Inquiry Told About Cover-Up

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 48

LENGTH: 599 words


An account of how senior US Administration officials tried to cover up President
Ronald Reagan's approval of secret arms sales via Israel to Iran was given
yesterday by Mr Richard Secord, former US Air Force major-general and the first
witness in the Iran-Contra congressional hearings.

Mr Secord described an atmosphere bordering on panic last November as news broke
of the arms sales and the network directed by the White House for channelling
private aid to the Nicaraguan Contra rebels.  He said he was shown an official
chronology which had been doctored by Mr Reagan's former national security
adviser, Mr Robert McFarlane.

"I said expletive deleted," Mr Secord declared to the joint House Senate panel
on the second day of hearings into the Iran-Contra affair.

His account came as a second person involved in the private Contra aid network
pleaded guilty to a conspiracy to defraud the US Government using a tax-evasion
scheme to raise money from private donors.  Mr Richard Miller, 34, a Washington
public relations executive, also implicated Lt-Col Oliver North, the dismissed
White House aide, in the conspiracy.

The guilty plea follows last week's conviction on a similar charge of the
professional Washington fund-raiser Mr Carl Channell.

The hearings began on a sombre note with Senator Daniel Inouye, chairman of the
Senate panel, paying tribute on behalf of members to Mr William Casey, the
former Central Intelligence Agency Director who died of pneumonia yesterday
morning after recent brain tumour surgery.

The death of Mr Casey could make it more difficult to pin down the extent to
which senior US officials including President Reagan were involved in the
scandal.

Mr Secord, in four hours of testimony which mixed black comedy with
action-packed descriptions of the international arms business, dropped heavy but
unsubstantiated hints that President Reagan knew of the diversion of profits
from the Iran arms sales to the Nicaraguan rebels.

He said President Reagan's national security adviser at the time Rear Admiral
John Poindexter, had told him the president was pleased with his performance.

Lt-Col North had also reported that the President knew that Iran was being
over-charged on weapons purchases in order to siphon off money to the Contras,
Mr Secord said.  However, he agreed he had never spoken to the President
directly.

Mr Secord, in his morning testimony, said several meetings with Iranians and
Israelis had taken place in London, Frankfurt and Tehran last year.  Though
there was talk of starting a new strategic relationship between the US and Iran
"it always came back down to trading arms for hostages."

The cover-up charge came after the arms sales to Iran became public knowledge.
White House officials were preparing testimony for Mr Casey, due to appear
before the Senate Intelligence Committee.

Mr Secord saw that Mr Reagan was supposed to have approved of the first Israeli
arms shipment in August 1985 after the fact, that is suggesting he did not know
about it.  Mr Secord said this was not true and then left the White House
meeting.

Later Mr Secord spoke of the day - last November 25 - that Mr Poindexter
resigned and Lt-Col North was dismissed.

That day Mr Secord was with Lt-Col North in a Washington hotel with his lawyer
when the President came on the line and thanked him for his service in
government.

A second telephone call of condolences came from Vice President George Bush.
This could be an embarrassing disclosure for Mr Bush who is the Republican
front-runner for the presidential nomination next year.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              71 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 7, 1987, Thursday

CIA Chief Takes Secrets Of Contra Affair To His Grave

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 593 words


Mr William Casey, the cantankerous Wall Street millionaire whom President Reagan
appointed in 1981 to be director of the Central Intelligence Agency, died
yesterday, taking to his grave secrets about the Iran/Contra arms scandal and
leaving behind on Capitol Hill a legacy of distrust for the CIA which will not
be quickly dissipated.

Mr Casey, who underwent surgery for brain cancer last December, shortly after
the Iran scandal erupted, never fully recovered and was forced to quit as CIA
director in February.

By that stage revelations about the links between the Reagan Administration's
Iran arms sales initiative and the officially supported private network which
was supplying the Contra rebels fighting the Sandinistas in Nicaragua had
already focused attention on 74-year-old Mr Casey.

Mr Casey's still ill-defined role in the Contra scandal was put directly in the
spotlight on Tuesday.  Retired Air Force Major General, Richard Secord, the man
who has been called first this week to testify before the Congressional hearings
into the Iran Contra affair because of his pivotal role, told of three meetings
with Mr Casey in 1985 and 1986 in his efforts to muster private and official,
but clandestine, US support for the Contras.

It was Edmund Muskie, the former secretay of state and member of the Tower
Commission appointed by President Reagan to look into the Iran affiar, who
remarked: "We (the commisision) felt Casey knew what was going on more than
anyone else."

Mr Casey, who began his public service career running spies in Europe for the
Office of Strategic Services in World War Two and later was chairman of the
Securities and Exchange Commission in the Nixon era, became a member of
President Reagan's inner circle only in 1980 when he was asked to take over as
manager of a presidential election campaign which was then floundering.

Mr Reagan appointed him director of the CIA where he was credited with helping
to restore the morale of the agency, launching long overdue management changes
aimed at improving accountability and efficiency, and boosting the influence of
the analytical side of its operations.

But there is a widespread conviction, particularly on Capitol Hill, that Mr
Casey's fascination with the covert operations and "dirty tricks" side of the
CIA, a fascination some trace to his OSS days in Europe, have done more damage
to the agency (and perhaps to the Republican Party) than his other contributions
have done good.

Mr Casey's dangerous penchant for covert operations surfaced most dramatically
in 1984 when he was forced to report to a furious Congress that CIA-backed
Contras had been involved in mining Nicaraguan harbours.  This disclosure, which
infuriated Congress and led to the cutting off of Congressional funding for the
Contras, also helped inspire Administration efforts to circumvent the bank on
Contra funding.

A common theme in both iniatives and in the Iran arms deals was that Mr Casey
and the Administration, by their secrecy, did not fulfil their obligation (in
Congressional eyes) to keep Capitol Hill informed through the well-established
intelligence oversight procedures.  If they had, arguably the Congressional
leadership would not have allowed the White House to blunder into the Iran arms
deals.

It is as yet unclear whether the Democrat-controlled Congress will seek new
legislative curbs on covert operations.  But there can be no doubt that one of
Mr Casey's legacies will be closer scrutiny of covert operations, and that is
not what Mr Casey would have wished.

LANGUAGE: ENGLISH

GRAPHIC: Picture William Casey, fascination with covert operations

                   Copyright 1987 The Financial Times Limited


                              72 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 8, 1987, Friday

Leading Figures May Be Indicated Says Walsh

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 6

LENGTH: 422 words

HIGHLIGHT:
Lionel Barber in Washington talks to the man leading the Iran-Contra affair
criminal investigation


Mr Lawrence Walsh, the independent counsel leading a criminal investigation into
the Iran-Contra affair, yesterday strongly suggested that he intends to seek
indictments against the leading players.

In an interview, Mr Walsh also implied that his criminial case would extend
beyond charges of a tax fraud conspiracy by fund raisers for the Contra rebels
in Nicaragua and would embrace other violations of the law.

Mr Walsh is a tall, angular 75-year-old, who, along with Governor Thomas Dewey,
fought corruption on the New York waterfront after the war.  He would not be
drawn on specific detail lest his criminal case be prejudiced.

While public attention in the US has focused on the drama of the joint
congressional hearings, which opened this week, Mr Walsh and his team of 23
associate counsel and 35 Federal Bureau of Investigation agents have been making
rapid progress in their criminal investigation.

On Wednesday, Mr Walsh obtained his second conviction when Mr Richard Miller, a
Washington-based public relations executive, pleaded guilty to a single count of
conspiracy to defraud the US Government by using a tax evasion scheme to attract
private donations to arm the Contra rebels.

Mr Walsh said that under the agreement between the US and Swiss Governments the
Swiss had agreed to make available vital bank records which documented the money
trail from the secret sale of US arms to Iran to the diversion of funds to the
Contra rebels.  However, individuals involved had the right to appeal before the
middle of this month.

Earlier this year, Lt-Col Oliver North, the sacked White House aide who
co-ordinated private fund-raising activities for the Contras, mounted an
unsuccessful legal challenge as part of his effort to halt the criminal probe
which has extended to 13 foreign countries.

"We expect a challenge by any person who may be indicted," said Mr Walsh.
However, he noted that his position had been strengthened as a result of the US
Department of Justice providing backing for his powers.

Some commentators have criticised Mr Walsh's choice of the conspiracy law in
pursuing his inquiry because it is difficult to prove a conspiracy before a
court.  Yesterday Mr Walsh said that use of conspiracy law offered a way into
the web of complex financial deals and the numerous characters in the
Iran-Contra affair.

While speaking hypothetically, he suggested that should a conspiracy case be
established it might follow that other crimes had been committed arising out of
the conspiracy.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              73 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 8, 1987, Friday

Secord's Word On Iran Deal Challenged

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 317 words


The credibility of retired Major General Richard Secord and his claim that he
had not, and did not intend, to profit from the Iran/Contra arms deals came
under fire yesterday.

At the beginning of a tense third day of public hearings into the arms scandal
in the Senate Caucus Room on Capitol Hill, the Senate chief counsel Mr Arthur
Liman adopted a prosecutorial stance as he cross-examined Mr Secord.

The crusty New York attorney adopted a tone and a line of questioning which
conveyed his scepticism about Mr Secord's claim that patriotism, not the
enormous profits generated by the arms sales, motivated the former undercover
Air Force officer.  Mr Liman managed to shake Mr Secord's equanimity, but not
his testimony.

"I did not come here voluntarily to be badgered by these questions which I have
answered repeatedly," Mr Secord said as his patient but menacing interregator
delved into the complex and mysterious financial affairs of the companies Mr
Secord admitted he controlled.  He tried to wring out of him an admission that
he also had a fiduciary interest.

Mr Secord insisted that the Dollars 8 m remaining in Swiss bank accounts from
the Iran arms sales was not profit.

"I have got bigger problems to face," Mr Secord said.  "I have got a special
prosecutor over here across the street trying to throw us in jail for performing
our duty as we saw it."

Earlier this week Mr Lawrence Walsh, the special prosecutor appointed to
investigate the Iran/Contra arms deals, secured his second guilty plea in
connection with the conspiracy case he is building around the scandal.  Mr
Richard Miller admitted to tax fraud charges arising from the private Contra
funding network.

While extracting more detailed information from Mr Secord in the three-day
examination of the first witness in the congressional inquiry, Mr Liman did not
level any allegations directly at Mr Secord.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              74 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 8, 1987, Friday

World Banking 18;
The Big Three Keep A Weather Eye

BYLINE: William Dullforce

SECTION: SURVEY; Pg. VI

LENGTH: 1280 words


As international financial markets intensify in volatility, Swiss bankers are
displaying more and more strongly in word and deed the characteristics for which
they are most reputed - prudence and conservative management.

It is not that they are yet furling the sails and battening down the hatches,
but they have started to warn the passengers and make sure the cargo is properly
secured, ready for any storm that might suddenly loom over the horizon.

Te first signal came from the Big Three banks: Union Bank of Switzerland (UBS),
Swiss Bank Corporation (SBC) and Credit Suisse.  In spite of chalking up another
gratifying surge in profits in 1986, they decided in concert not to increase
their shareholders' dividends (apart from an obligatory bonus payment by UBS to
mark its 125th anniversary this year).

Shareholders would agree that it was time to take a breather, Mr Walter Frehner,
SBC's president, said.  indeed, in the previous two year's shareholders had been
coddled with dividend rises and rights issues.

Then Mr Hans Rudloff, Credit Suisse's general manager and deputy chariman of
Credit Suisse First Boston, in an unexpected off-the-cuff discourse in Geneva,
voiced the fear that financial markets were racing dangerously ahead of bank
regulators.  Bank and company managements did not always know what they were
doing when playing with the new financial instruments, he said.

On the same occasion Mr Claude de Saussure, chairman of the Bankers'
Association, pointed to the "less promising" situation that had developed last
year on the international debt front.

Swiss banks with only 1 to 1.5 per cent of Third World debt on their books would
seem to have little cause for worry but Mr de Saussure focused on the domino
effect a major failure or two could have within the world monetary system.

Next, in a sober rather than euphoric anniversary address to shareholders, Mr
Robert Holzach, the UBS chairman, raised an admonishing finger about the growing
practice of keeping operations off balance sheet to evade banking regulations.

Some brutal disenchantments could be in store for over-eager "sorcerer's
apprentices" in the financial market and drastic thinnings could be expected in
the thicket of new financial instruments, Mr Holzach warned.

Evidence of the return to caution in Swiss banking can be read into the merger
in January of Soditic, the "enfant terrible" of the Swiss franc bond market,
with Bank S G Warburg in Zurich.  The move would seem to be essentially
defensive, providing Soditic with a safer profit base.

Sluggishness on the capital markets during the first quarter and a weakening in
both prices and turnover on the stock exchanges may have influenced the bankers'
mood.  But the banks' 1986 performances and the continuing adjustments towards
greater efficiency in the Swiss market would seem to provide solid enough
grounds for confidence in the future.

The Big Three all booked increases in net earnings of about 12 per cent.  Some
other "universal" banks did even better, Banca della Svizzera Italiana, for
instance, showing 15 per cent profit growth, a result which reflects the greater
relative weight of investment banking in BSI.

Two former private banks gone public, Bank Julius Baer and Bank Vontobel,
demonstrated the stronger earnings potential in fee-based business with
increases in earnings of 42 per cent and 40 per cent respectively.  However,
1986 also saw a gladdening improvement in interest earnings at most banks.

The Swiss National Bank (SNB) recorded a 10.3 per cent increase in the balance
sheets of the 71 banks it monitors.  Statistically, the appreciation of the
Swiss franc dampened the growth: the asset increase would have been around 14
per cent at stable exchange rates, the SNB calculated.

A further surge in Swiss capital exports took place last year, SNB figures
showing an outflow of SFr 52.2 bn (Dollars 34.5 bn) in bonds, notes and shares
against SFr 46.1 bn in 1985.  Foreign bond issues totalled SFr 44.3 bn, an
increase of 22 per cent over 1985 and 219 per cent over 1980.

Trading on the Zurich stock exchange alone in 1986 reached SFr 558 bn, a rise of
more than 23 per cent over the previous year and the SBC share index powered to
a new peak in January.

On top of all this financial expansion, the Swiss economy grew by a satisfying
2.5 per cent in GDP last year, money supply growth was held to less than 2 per
cent and both the inflation and unemployment rates were under 1 per cent.

It is no longer possible to stigmatise the Swiss financial market as dull and
uninnovative.  Last year FLIPS (foreign interest payment securities) were
introduced and bonds became available with options on shared indices, gold and,
more controversially, Swiss-registered shares.  True, some big bankers believe
the search for new instruments is going too far.

Swiss stock exchanges are now firmly set to introduce futures trading early next
year and computerisation has much improved facilities at the three main bourses,
Zurich, Geneva and Basle.  Changes in law leaving pension funds flush with money
and able to invest more in shares would seem to ensure greater activity on the
exchanges in the long run, whatever the slackening in the first quarter of this
year.

A considerable tidying up of the few remaining financial regulations continues.
In May last year the SNB removed the distinction between "notes" or private
placements and bond issues and the Bankers' Association has subsequently come to
terms with the SNB and Banking Commission over prospectuses for the notes.

Similarly, after the SNB's announcement that it would withdraw next October from
its role as gamekeeper to the convention de diligence, the agreement among the
banks to check the source of deposits for criminally-acquired funds, the
association has refurbished it with its own mechanism of sanctions.

It also appears to be close to agreeing with the Banking Commission a formula by
which funds placed with the banks by lawyers acting on behalf of anonymous
clients can be kept free from "dirty" money.

Marcos, David Levine, the Iran-Contra affair in the US and Guinness - names
surfacing in financial scandals last year - were all linked in one form or
another by subsequent investigations to Swiss banks and kept the spotlights on
Swiss banking secrecy.

The remodelling of the convention de diligence and the insider trading law, now
on its slow passage through parliament, illustrate the Swiss desire to preserve
their respectability.  The true figure is not known but the frequently-quoted
estimate that SFr 700 bn of funds are administered by Swiss banks suggest that
the attraction of Switzerland for investors remains unimpaired.

Two major preoccupations of Swiss bankers are the stamp duty on securities
transactions, which brought over SFr 2 bn in revenue to the Federal Treasury
last year but which the bankers claim disadvantages the Swiss financial market,
and the shortage of qualified personnel.  The big banks continued to extend
their positions and profit-generating potential abroad in 1986.

Mr Otto Stich, the Finance Minister, offered some relief last year by lifting
the sales tax on physical gold transactions and halving the charges for bank
customers on Euro-issues to SFr 1.5 per thousand.  The banks will not be
satisfied until the levy on foreign-to-foreign business is eased.

All in all, if the current wariness of Swiss bankers can be explained by the
short-term outlook and fears about the fecundity of new financial instruments,
the solidity of the banks and the remarshalling of the Swiss financial market
would seem to offer buffers against future shocks.

LANGUAGE: ENGLISH

GRAPHIC: Picture Parade Platz, Zurich, Union Bank and Credit Suisse gave early
signals of increased prudence; Table, no caption; Picture Mr Otto Stich, lifted
sales tax on physical gold transactions

                   Copyright 1987 The Financial Times Limited


                              75 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 8, 1987, Friday

PM Denies Blowpipe Missile Claims

BYLINE: Tom Lynch

SECTION: SECTION I; UK News-Parliamentary & Politics; Pg. 16

LENGTH: 159 words


The government has not authorised the supply of Blowpipe missiles to the
US-backed Contra rebels in Nicaragua, Mrs Margaret Thatcher, the Prime Minister,
told the Commons yesterday.

She was challenged by Dr David Owen, the SDP leader, to say whether government
representatives were approached by representatives of the US Government to
provide weapons or support to Iran or the Contra rebels as part of the events
under scrutiny in the US Irangate affair.

Dr Owen asked for "a categoric assurance that no such weapons or support were
supplied to Iran or the Contras."

The Prime Minister protested that, when he was Foreign Secretary, Dr Owen had
abided by the convention that ministers never revealed communications between
governments.

She said the Government's position on Iran had been clear since 1984 and she
repeated assurances by defence ministers that the Government had not authorised
any supply of Blowpipe missiles to the Contras.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              76 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 9, 1987, Saturday

Man In The News;
Irangate Lets Loose Its Fraud Detector

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Pg. 6

LENGTH: 1025 words

HIGHLIGHT:
Lawrence Walsh


It was only a matter of time before Maj-Gen Richard Secord short-circuited.  "I
have got bigger problems to face," he exploded under relentless questioning at
the joint Congressional hearing on the Iran-contra affair.  "I have got a
special prosecutor across the street trying to throw us all in jail for
performing our duty as we saw it."

The tall, angular figure of 75-year-old Mr Lawrence Walsh was never very far
away from the hearing, which opened this week under the bright lights of the
Senate caucus room.  Off-stage, he and a team of 23 associate counsels, 35 FBI
agents and 11 Internal Revenue Service officals have for the past four months
been building a criminal case against the major players in the scandal.  Judging
by his testimony this week, Richard Secord is definitely one of them.

Mr Walsh will not talk about specific individuals under scrutiny, but in a
50-minute interview this week in a downtown Washington DC office he offered some
clues about the nature of the case he is preparing as "independent counsel"
appointed to investigate wrong-doing in the executive branch of the US
Government.

"The goal of this inquiry is to arrive at the truth and take whatever action
might be appropriate," says Mr Walsh, a native Nova Scotian who counts among his
career highlights cracking an American pro-Nazi group in the 1930s, fighting
racketeering on the New York/New Jersey waterfront in the 1950s, and as deputy
Attorney General under President Eisenhower, starting an ultimately success
investigation of the Teamsters union boss Jimmy Hoffa.

He has spent most of the past 20 years engaged in civil litigation, though he
had a brief spell as President Nixon's representative at the Paris peace talks
with the Communist Vietnamese.  His current job - which thanks to the art of
delegation he manages to combine with a continuing private practice in Oklahoma
City - cannot be explained without a short history lesson.

The office of independent counsel was created in 1978 to replace the earlier
position of special prosecutor.  The move was aimed at protecting the post
against abitrary action by the executive.

Lawrence "Ed" Walsh was appointed by a federal panel of judges on December 19
last year.  Until that time, the criminal investigation of the Iran-Contra
affair had been led by Mr Edwin Meese, US Attorney General, and the Justice
Department.  Mr Meese, a personal friend of the President, was forced to step
aside after criticism that he faced a conflict of interest and could not, as a
senior Government officer, investigate the Government itself.  He recommended
that the panel of judges appoint an independent counsel.

Mr Walsh is leading the most comprehensive criminal investigation of any
counsel: it covers every aspect of the US arms sales to Iran, the diversion of
profits from those sales to the Nicaraguan Contra rebels and the private aid
network set up to arm the Contras during a Congressional ban on official US
military aid between October 1984 and October 1986.

So far, the deceptively mild-mannered Mr Walsh has concentrated his attack on
the legality of private fund-raising efforts to send arms to the Contras.  And
he has met with swift success, uncovering a tax fraud scheme whereby rich
private American donors sent their Contra contributions to supposed charitable
foundations and then wrote off the donations against federal tax.

Two men - one a professional fund-raiser and another a Washington public
relations executive - have pleaded guilty to a single count of conspiracy to
defraud the US Government of revenues and have named the sacked White House
aide, Lt Col Oliver North, as a member of the conspiracy.

The speed of Mr Walsh's convictions suggest that the mass of evidence against
the two men was overwhelming.  This must be very worrying for the White House,
in view of the fact that the President gave his blessing to private fund-raising
for the Contras during the Congressional aid cut-off.

The day after the first guilty plea, by Mr Carl Channell, President Reagan's
press secretary issued a defensive statement which received less attention than
it deserved.  It said: "In the legal view of the White House, the President is
not part of this conspiracy."

Though difficult to prove, Mr Walsh says conspiracy is a useful way to prise
open the scandal and prepare a criminal case.  "If one was presented with a
complex series of transactions with a large number of people participating in
them," said Mr Walsh, stressing, of course, that he was speaking only
hypothetically, "one could think in terms of a conspiracy."

But the establishment of a criminal case of conspiracy to break the law is only
the start: "If steps were taken in furtherance of a certain agreement to
conspire, those steps in themselves may be discrete (ie specific) crimes."

Between the lines, Mr Walsh is suggesting that other federal laws may have been
violated in the Iran-Contra scandal.  He declines to say which ones, though most
commentators have suggested that they involve illegal export of weapons from the
US and violations of the Neutrality Act which bans mercenary recruiting in the
US.

But this is all a broad canvas and Mr Walsh's picture is far from complete.  He
is still waiting for Swiss bank records which trace the money trail.

Congress, which wants to tell the Iran-Contra story to the American public, is
anxious to secure testimony from all the major players. It has therefore given
limited immunity from prosecution to several individuals in order to induce them
to talk.

Mr Walsh cannot use testimony which has been given under immunity; he must seek
the evidence from independent sources.

This leads to some extraordinary steps: each week Mr Walsh's team places
evidence gathered under seal before a court in Washington.  Mr Walsh and his
team may not listen to any testimony given by a witness testifying under
immunity.

One person he will almost certainly be listening to is Mr Secord who agreed to
testify without immunity this week.  Every word that Mr Secord said may be used
against him by Mr Walsh in a future indictment.  No wonder that fuse blew.

LANGUAGE: ENGLISH

GRAPHIC: Drawing, no caption

                   Copyright 1987 The Financial Times Limited


                              77 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 11, 1987, Monday

McFarlane May Shed More Light On Contra Affair

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 307 words


President Ronald Reagan's involvement in the Iran Contra arms scandal is
destined to move back to the centre of political debate in Washington this week
as Mr Robert McFarlane, the Administration's former national security adviser,
appears before the Congressional committee investigating the affair.

With much public attention last week focused on the collapse of Mr Gary Hart's
presidential prospects, the first four days of televised hearings attracted less
interest than the White House might have feared.

Moreover, the first witness, retired Major General Richard Secord, a private
citizen when he played his role in the scandal, for all the wealth of detail
provided no dramatic new revelations about Mr Reagan's participation.

Mr McFarlane, however, a man so tortured by his role that he attempted suicide,
was a top White House adviser until December 1985 and is expected to provide
information about what went on inside the White House.  This is not likely to be
helpful to Mr Reagan.

The President continues to insist that, like his fellow countrymen, he is
watching the hearings to find out what went on.

The New York Times reported yesterday that Mr McFarlane intends to tell the
committee that President Reagan ordered the National Security Council staff to
help arrange support for the Contra rebels seeking to overthrow the Nicaraguan
Government.  But he will insist, the newspaper says, that Mr Reagan did not say
how it should be done and that neither he nor the President ordered anything
illegal.

Mr McFarlane is also likely to be questioned closely on events as the scandal
broke last autumn.  Mr Secord last week indicated that Mr McFarlane was involved
in preparing an inaccurate chronology of events.  This charge, if correct,
points to an early White House attempt to cover up details of the affair.

LANGUAGE: ENGLISH

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                              78 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 11, 1987, Monday

Funeral Of Last US Spymaster May Herald The End Of An Era

BYLINE: Lionel Barber, Long Island

SECTION: SECTION I; Back Page; Pg. 48

LENGTH: 514 words


On a clear blue Saturday afternoon in Nassau County, Long Island, Americans paid
their last respects to William Casey, the Irish New Yorker, whose power and
personality as Director of the Central Intelligence Agency cast a shadow over
the Reagan era.

In its brief simplicity, the burial ceremony in the Catholic Cemetery of the
Holy Rood, near Roosevelt race-tack just north of Eisenhower Park, may also have
signalled the end of another age.

William Casey was the nation's last spymaster.  A World War Two veteran of the
Office of Strategic Services, the predecessor of the CIA, Casey was the official
in charge of infiltrating agents into Nazi Germany.  His later appointment as
Director of Central Intelligence, by President Reagan, made him, therefore, the
Keeper of the Seal; the man whose views were shaped by the fight against
totalitarianism 40 years ago.

Those gathered on Saturday seemed to sense this change: the silver-haired OSS
veterans, some accompanied by their wives; the bulky CIA men who stood nervously
waiting for the funeral cortege to arrive.

The day had begun on a discordant note as President Reagan, accompanied by the
majority of his Republican Cabinet and 200 other dignatories, had attended a
mass in St Mary's church in Roslyn Harbour, close to the Casey family home.

Bishop John R McGann said: "Bill must have thought us bishops blind to the
potential of a communist threat in this hemisphere as we oppose and continue to
oppose the violence wrought in Central America by the support of the
(Nicaraguan) Contras."

The funeral came at the end of a week which had seen the opening of
Congressional hearings in Washington into the Iran-Contra arms scandal.  The
full extent of Mr Casey's role in the sale of US weapons to Iran and the
diversion of profits to the Contra rebels in Nicaragua is now unlikely to
emerge.

While the mass was being conducted, a few miles away in the cemetery there were
the first signs of CIA security.  Unmarked vans cruised up and down the winding
cemetery roads.

Catholic cemetery gardeners, their walkie-talkies attached to green jumpsuits,
were out in force.  Very soon the locals began to arrive, dressed in T-shirts
and jeans, their children in tow, and not a black tie in sight.

By 4 pm some 100 people had begun to assemble behind the yellow cordon 20 yards
back from the Casey grave.

They came in big black limousines.  Mr Casey's widow, Mr Ed Meese, US
Attorney-General, Mr Robert Gates, Casey's protege who last month was forced to
withdraw his nomination as CIA Director because he was ensnared in the Irangate
scandal, and Mr William Webster, the FBI Director who is to assume Mr Casey's
job.

The ceremony took less than 15 minutes.  Most of the chaplain's words were
drowned by aircraft overhead on their way to La Guardia and JFK airports.  And
then the cortege left, leaving the mahogany coffin lying on top of the grave.

So William Casey was buried among the Multahys, the McGintys and Maffuttis and
the Consantinos.  The news photographer took his last shot.  A funeral on Long
Island.

LANGUAGE: ENGLISH

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                              79 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 12, 1987, Tuesday

Reagan 'Approved Cash-For-Hostages Plan'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 48

LENGTH: 628 words


President Ronald Reagan approved a daring scheme to secure the release of US
hostages held in Lebanon, which involved paying Dollars 1 m each to the captors
and other parties involved, the Iran/Contra Congressonal hearing in Washington
was told yesterday.

This revelation was made under questioning by Mr Robert McFarlane, President
Reagan's former national security adviser.

Mr MacFarlane also told the hearing:

He had been "asked to play God" and choose which one of seven US hostages in
Lebanon was to be freed in exchange for an arms shipment to Iran.

Lt-Col Oliver North, then a White House aide, had told him he planned to shred
potentially damaging documents on the weekend just before the Iran/Contra affair
began to emerge publicly last November.

Outlining the cash-for-hostages plan, Mr McFarlane said some of the money came
from funds raised for the Nicaraguan rebels, partly from foreign donors.  This
was paid to Drugs Enforcement Agency agents sent to the Middle East to
co-ordinate and carry out the rescue mission.

In the summber of 1985 Col North sent a memorandum to Mr McFarlane saying that
the agents were to be involved in the operations on the authority of the US
Attorney General Mr Ed Meese.  He said that travelling expenses would be met by
funds normally accumulated for the Nicaraguan Contras, but the scheme never came
off.

Mr McFarlane said he was "asked to play God" and choose one of the hostages by
an Israeli intermediary.

He said he chose Mr William Buckley, who is reported to have been the CIA
station chief in Beirut.  US officials have said that in retrospect, they
believe Mr Buckley, who was tortured by his captors, was already dead when the
arms shipment was made.

In another part of his testimony, Mr McFarlane told how Col North had told him
"there will have to be a shredding party" to dispose of documents relating to
the affair.

Mr McFarlane said he asked Col North if he had approval for the secret
channelling of funds to the Contras.  Col North replied: "You know I would not
do anything without approval."

Earlier Mr McFarlane told the hearing how the Administration persuaded several
foreign countries to fund the Contras during a Congressional ban on US military
aid, and President Reagan knew and approved the effort.

Mr McFarlane said on two occasions he handed the President a secret memorandum
describing how an unnamed ally paid Dollars 1 m a month to the Contras, which it
later doubled to Dollars 2 m a month.

Mr McFarlane did not identify the foreign donor, but he broke his pattern of
anonymity at one point and referred in his testimony to preparations in
Washington for a state visit by King Fahd of Saudi Arabia in early 1985.

Since the Iran scandal broke in November, Saudi Arabia has denied American news
reports that it gave money to the Contras during that October 1984 to October
1986 Congressional aid ban.

Mr McFarlane, who as a marine led the first US combat attack in Vietnam, began
his testimony to the House Senate panel on a note of contrition.  "This has been
and remains a source of deep remorse, even anguish, for me," he said.

He explained how the Administration had been forced to turn to foreign donors
after Congress banned official assistance for the Contras.  "The President
repeatedly made clear in public and in private that he did not want to break
faith with the Contras," he said.

Mr McFarlane approached two allies, which he identified as "country one" and
"country two," for financial support.

But "country one" was not able to help, so Mr McFarlane approached the
Washington ambassador of "country two." After an offer of Dollars 1 m a month,
Mr McFarlane told the President, who he said expressed "satisfaction and
pleasure" at the donation.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              80 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 14, 1987, Thursday

BYLINE: William Dullforce, Geneva

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 78 words


The Swiss authorities have blocked the Dollars 10 m given to the Contra rebels
by the Sultan of Brunei, but which ended up in the wrong Geneva bank account,
writes William Dullforce in Geneva.

Mr Vladimir Stemberger, the magistrate in Geneva investigating Iran-Contra
ramifications, said he had ordered the money and the interest earned on it to be
frozen after the businessman, in who account it was deposited last year, had
voluntarily offered to restore it.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              81 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 14, 1987, Thursday

Nato Tackles Task Of Drawing Up Reply To Gorbachev Offer

BYLINE: David Buchan, Stavanger

SECTION: SECTION I; European News; Pg. 3

LENGTH: 561 words


Nato today makes its first collective ministerial effort to come up with an
Alliance answer to Mr Mikhail Gorbachev's sweeping proposals to rid Europe of
all nuclear missiles with a range between 500 and 5,000 kilometres.

Arms control will dominate Nato's Nuclear Planning Group (NPG) meeting, which
lasts today and tomorrow in this Norwegian oil port and is composed of 14
defence ministers.  But a final Nato reply to Mr Gorbachev is not expected
before mid-summer.

An early missile accord with Moscow would give President Ronald Reagan a useful
distraction from the Iran-Contra affair, but the US Administration and other
allies have made it clear they do not want to rush West Germany, Nato's key
front-line state, into making up its mind.  Chancellor Helmut Kohl, presiding
over a coalition government divided on European nuclear arms control, has firmly
refused to be rushed.

There is a strong chance that General Bernard Rogers, the supreme Nato field
commander, and General Wolfgang Alterberg, chairman of the Nato Military
Committee, will tell the Stavanger meeting that either warhead reduction should
be slowed down or warhead modernisation should be speeded up, if Nato is to lose
all its Europe-based missiles of over 500 km range.  If that is the soldier's
message, there is an equally strong chance of ministers concurring.

An added problem for the West Germans is the last minute inclusion in Soviet
proposals of a demand that US-controlled warheads of 72 Pershing 1A missiles
held by the West German air force must disappear as part of elimination from
Europe of shorter range intermediate nuclear forces (known as SRINF with a
500-1,000 km range).

Western defence officials do not deny the military symmetry behind the Soviet
demand.  The West German Pershing 1A's are all that Nato has in the SRINF range,
but they happen to match the total of 70 Soviet SRINF missiles in Eastern Europe
and Western Russia.  According to UK defence officials, there are 42 SS-12/22
missiles in Eastern Europe, and 16 SS-12/22 missiles and 12 SS-23s in Western
Russia.  The Soviets have some 60 SRINF weapons in Asia, where the US has none.

However, Moscow is making a late change in the ground rules, some Western
officials complain, by including "third country" systems in what is supposed to
be a purely bilateral superpower negotiation that had focused on launchers
rather than warheads.

Bonn's dilemma, as its Defence Minister, Mr Manfred Woerner, is expected to
spell out at the NPG meeting, is its probable isolation whatever Nato decides.
If Nato wants to accept the Gorbachev zero offer on SRINF, then only the West
German Pershing 1A force stands in the way of agreement.  If Nato rejects the
SRINF zero option and demands a Western right to match the higher global Soviet
total on SRINF then West Germany might still be the only recipient of extra
Western Weaponry.

"The Germans have got a difficult, sophisticated political debate on their
hands," commented a senior UK defence official this week.

Defence ministers and Nato's uniformed top brass are this week likely to air
fully the military reservations about the Gorbachev proposals, knowing that Nato
foreign ministers, at their Reykjavik meeting next month which is expected to be
more decisive, will take a more political view of the need to nail down an
East-West accord.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              82 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 14, 1987, Thursday

BYLINE: William Dullforce, Geneva

SECTION: SECTION I; American News; Pg. 4

LENGTH: 119 words


The Swiss authorities have blocked the Dollars 10 m which was donated to the
Nicaraguan Contra rebels by the Sultan of Brunei, but ended up in the wrong
Geneva bank account, writes William Dullforce in Geneva.

Mr Vladimir Stemberger, the magistrate in Geneva investigating Iran-Contra
ramifications, said he had ordered the money and the interest earned on it to be
frozen after the businessman, in whose account it was deposited last year, had
voluntarily offered to restore it.

Credit Suisse, the bank to which the money was paid, said it would lodge charges
of misappropriation against the un-named businessman, who earned Dollars 253,000
in interest on the sum having moved it to another Geneva bank.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              83 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 15, 1987, Friday

Danger From The Patriots Who Went Beyond

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 3

LENGTH: 883 words

HIGHLIGHT:
Lionel Barber explains the bad light cast on the White House by Iran-Contra
revelations


Mr Robert McFarlane, a former top foreign policy adviser to President Ronald
Reagan, is a graduate of the Alexander Haig school of languages.  A former
marine, who led the first combat mission in Vietnam, in 1965, Mr McFarlane is an
expert at mutilating his mother tongue.

"I thought Ollie was surely the most mission-oriented, can-do professional on
the staff," he declared this week before the joint Congressional hearing on the
Iran-Contra affair, "and I believe the interpretation of guidance I had given
him would probably be, certainly carried out, but that probably he would on
occasion go beyond."

Mr McFarlane's sombre, almost somnambulant, style and his description of a
former White House colleague, Lt Col Oliver North, is deceptively andoyne.
Without question, what he has told the House-Senate hearing, in more than 14
hours of testimony, has been both illuminating to the general public and
damaging to Mr Reagan.

He began on Monday morning, in the House Foreign Affairs Committee room at the
Rayburn Building in the Capitol.  The space was cramped and Mr McFarlane,
accompanied by his crisply attired attorney, Mr Leonard Garment, looked very
tense.

His opening statement went to the heart of the affair, portraying an
administration at war with itself and with Congress over a main issue of foreign
policy: How to cope with a hostile regime in Nicaragua which appeared bent on
fomenting unrest elsewhere in Central America.

"There was a powerful - and, to many, a persuasive - case that to lose in
Nicaragua would invite the Soviets to step up their investment in aggression
significantly in other developing nations of the world," he said, in a variation
on the domino theory applied to Vietnam, Laos and Cambodia in the 1960s.

Then, however, he accurately characterised the Reagan administration's
fundamental mistake: "If we had such a large strategic stake, it was clearly
unwise to rely on covert activity as the core of our policy."

In the ten days since the Congressional hearing on the affair opened, Mr
McFarlane and the first witness, retired Major-Gen Richard Secord, have revealed
in gruesome detail what happens when a covert policy goes wrong, and how it is
impossible to rally the public behind a policy one cannot talk about openly.

The hearing has already shown how the Reagan administration allowed its foreign
policy towards Nicaragua and Iran to be hijacked by a small number of people
who, however, dedicated to their country, were simply not up to the job.  Also
revealed is how the President and his closest advisers (especially Mr William
Casey, the late director of the Central Intelligence Agency) simply refused to
be bound by the will of the US Congress on the matter of aid to the Contras.

This is the wider canvas of the Iran-Contra hearing and one which will come into
sharper focus in the next weeks.  It explains, too, why the 26 senators and
congressmen on the House-Senate panel take their job so seriously.  They are
reasserting the constitutional right of Congress, along with the president, to
shape foreign policy.

The lawmakers - among them several trained attorneys and two former federal
judges, Senator Howell Heflin of Alabama and Senator George Mitchell of Maine -
are exacting retribution.  On several occasions in 1985, Mr McFarlane, then
National Security Adviser, at best misled, at worst lied to Congress about the
activities of Col North in fund-raising for the Contras and in providing them
with paramilitary advice.

In one illuminating incident described this week, Mr McFarlane said he had dug
out several incriminating National Security Council files about Col North and
the Contras, in response to repeated questions from Congressman Michael Barnes,
a Democrat from Maryland.

Mr McFarlane questioned Col North and received his "personal certification" that
he (North) was within the law.  Later, Mr McFarlane invited Mr Barnes to his
White House office to examine the damaging files, but they were among a stack of
papers piled on the desk and Mr McFarlane abruptly announced he had to cut the
meeting to 20 minutes.  Mr Barnes, sensing the impossibility, left the files
intact and missed the scoop of the year.

This week, Mr McFarlane does not appear half as smart.  Like Gen Secord in week
one, he has been gradually worn down by relentless questioning until he exploded
with frustration.  Asked by Congressman Peter Rodino, who led House impeachment
proceedings against President Richard Nixon in the Watergate hearings 13 years
ago, if he knew of Col North's shredding of documents and possible obstruction
of justice, Mr McFarlane blurted out: "That's right, and I deserve
responsibility and I ought to be prosecuted to the full extent of the law and
sent away."

This is the unspoken message in the hearings: Witnesses testifying without
limited immunity can incriminate themselves and others.

The White House, forced by embarrassing testimony to abandon its earlier stance
of not commenting on the hearing, is getting edgy.  The President's active role
in support of the Contras is being gradually drawn out in public.  With Col
North and Vice-Admiral John Poindexter, Mr McFarlane's successor as National
Security Adviser, to testify next month, things can only get worse for the
president.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              84 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 15, 1987, Friday

McFarlane Fails To Recall Meeting With King Fahd

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 216 words


Mr Robert McFarlane, President Reagan's former National Security Adviser
yesterday said he did not recall meeting King Fahd of Saudi Arabia to solicit a
contribution with the Nicaraguan Contra rebels.

The Washington Post reported that Mr McFarlane requested Dollars 8 m to Dollars
10 m from the Saudis in May or June 1984. A second attempt to obtain money came
the following year during a state visit by King Fahd when Mr McFarlane asked the
Saudi ambassador to the US for Dollars 15 m.

The question of Saudi contributions to the Contras during the 1985 congressional
ban on US military aid and official fund-raising has become an important and
sensitive aspect of the Iran-Contra hearings on Capitol Hill.  The Saudis are
estimated to have sent around Dollars 30 m to the Contras but US officials may
have committed an illegal act in soliciting the money during the aid ban.

Yesterday, a weary looking Mr McFarlane, on his fourth day of testimony, told
the House-Senate panel that he had been telephoned twice by Mr Reagan in the six
months since it was revealed that between Dollars 10 m and Dollars 30 m was
diverted from secret US arms sales to Iran to the Contras.  He said Mr Reagan
told him this week that he thought the hearings 'shed more light' on the
Iran-Contra scandal.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              85 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 16, 1987, Saturday

How 'TC' Hung Around To Make The Drop

BYLINE: Lionel Barber

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 536 words

HIGHLIGHT:
Lionel Barber describes the way a 'secret war' believer spoke about his shadowy
role


He looks three feet wide coming on seven feet tall, a Stanford University
graduate who could easily be taken for a member of the varsity sculling team.

In fact, he is Robert W Owen, alias "TC" alias "the courier" - the go-between
for Lt-Col Oliver North in the Reagan Administration's secret war against the
Sandinista Government in Nicaragua.

On Thursday afternoon, Mr Owen described how on rainy nights he hung around on
street corners near the White House waiting to make "the drop."

A car would pull over, and Mr Owen would hand an envelope stuffed with maps and
cash, provided courtesy of Col North, to one satisfied Nicaraguan Contra rebel
leader, presumably wearing dark glasses.  All part of a day's work in support of
the cause - fighting Communism in Central America.

Mr Owen, like Col North, Admiral Poindexter, retired Major-General Richard
Secord and the other characters in the Iran-Contra affair, is a true believer.

Indeed, in an opening statement to the joint House and senate panel
investigating the affair, he made his belief clear: Congress has neither the
right nor the power to stop him from pursuing the cause.

During his testimony, Mr Owen often offered a sheepish grin by way of
explanation.  Yes, it was true that Col North on occasions called himself
"Steelhammer," and yes sir, it was correct that the Contra rebel leader and
military co-ordinator Mr Adolfo Calero went under the code name "sparkplug."

It was the first time "TC" had spoken out about his shadowy role in Col North's
underground private aid network since the Iran-Contra scandal broke.

He has been identified, however, more than a month earlier after his business
card turned up in a cargo aircraft carrying army boots and weapons, downed by
the Sandinistas in the Nicaraguan jungle.

Mr Owen is not a man of many words, indeed many of them are incomprehensible to
anyone outside the tightly-knit US Marine and intelligence world which is so
much part of the Iran-Contra story.

Some of the intelligence maps and photos delivered to the Contras came from "the
people across the river," meaning the Pentagon, or "the people over the river,"
a reference to Langley, headquarters of the Central Intelligence Agency.

If you are confused, so are some of the members of the joint Congressional
committee.  They thought that they, Congress, had banned all direct and indirect
US military aid to the Contras between October 1984 and October 1986 - under the
so-called Boland Amendment.

The White House, watching helplessly as the story unfolds on Capitol Hill, has
been hard put for an explanation.

Mr Marlin Fitzwater, President Reagan's chief spokesman, pointed out that at
least five versions of Boland had been passed by Congress.  "What we are saying,
very simply, is that there seems to be a great deal of confusion about the
Boland amendment."

President Reagan's former National Security Adviser, Mr Robert McFarlane,
admitted this week that he did not do the obvious thing and talk to a lawyer.

But he did tell his staff not to "solicit, encourage, coerce or otherwise broker
financial contributions to the Contras."

It sounds plain enough.  But somebody, somewhere was listening to another voice.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              86 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 16, 1987, Saturday

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 207 words


The US Administration will shortly notify Congress that it intends to sell about
12 F-15 jet fighters to Saudi Arabia for around Dollars 500 m, Lionel Barber
writes from Washington.

US officials said yesterday the sale was part of an agreement between the two
allies whereby the Saudi stockpile of 60 F-15s was replenished when existing
aircraft became worn out.

American arms sales to Arab countries are always controversial because of the
strong Israeli political lobby in the US.  This one could become embroiled in
the Iran-Contra controversy as well.

President Ronald Reagan's former National Security Adviser, Mr Robert McFarlane,
disclosed this week that the President had held a meeting with King Fahd of
Saudi Arabia in February 1985 to discuss support for the Nicaraguan Contra
rebels during the congressional ban on US military aid.

The Saudis then doubled their contributions to Dollars 2 m a month.  Mr
McFarlane was also reported to have requested Saudi donations for the Contras,
though in testimony under oath he denied this.

Mr McFarlane was repeatedly asked whether the US and Saudi Arabia were operating
a quid pro quo such as private Contra funds for future US arms sales.  He said
no such agreement existed.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              87 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 16, 1987, Saturday

Reagan Takes Responsibility For Contra Aid Decisions

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 739 words


President Ronald Reagan yesterday took personal responsibility for decisions to
support the Nicaraguan Contra rebels during the Congressional ban on US military
aid between October 1984 and 1986, and said he saw nothing wrong with either
other countries or individual Americans supporting them, writes Lionel Barber in
Washington.

Striking a defiant tone in the light of damaging testimony during the
House-Senate public hearings on the Iran-Contra affair, President Reagan made no
attempt to hide his own role, and suggested a majority of Americans supported
opposition to a Soviet beachhead in Central America through Nicaragua.

"As a matter of fact, I was very definitely involved in decisions about support
to the freedom fighters," he said.

The question of back-door financing and possible illegal supply of military
weapons is being investigated by Congress and a special prosecutor pursuing a
criminal inquiry.  President Reagan's decision to take some responsibility,
while not without risk, marks an attempt to dampen speculation about his own
role.

The President, speaking to non-Washington editors and broadcasters in a question
and answer session, also said he had trouble remembering a reported plan to
ransom US hostages held in Lebanon.  However, he suggested that the money might
have been used to mount a rescue attempt.

Mr Robert McFarlane, president Reagan's former national security adviser, told
the Iran-Contra hearings this week that the President and Mr Ed Meese, US
Attorney-General, approved a secret rescue operation to free the hostages by
paying Dollars 2 m (1.2 m Pounds (pds)) in bribes and ransom.

Mr Marlin Fitzwater, Mr Reagan's White House spokesman, said earlier this week
the "President did not know there was ever a plan for ransoming hostages."
Yesterday's denial was far less categoric and was inevitable after Mr McFarlane
stuck to his story while testifying under oath.

While President Reagan admitted direct involvement in decisions aimed at
supporting the Contras, he denied being aware that profits from secret US arms
sales to Iran were diverted to the Contra rebels during the Congressional ban.
The disclosure last November that between Dollars 10 m and Dollars 30 m were
skimmed off the arms sales sparked a scandal which has dominated the American
political scene ever since.

In his session with reporters President Reagan gave hints of the White House
defence in the coming weeks when further damaging testimony is likely to come
from his former national security adviser, Admiral John Poindexter, who had
succeeded Mr McFarlane to the post, and Lt Col Oliver North, the sacked White
House aid.

The President said: "I don't see anything wrong with other countries that share
our feeling about democracy ...  (coming) to the aid of these freedom fighters."
This was a reference to payments of around Dollars 30 m by Saudi Arabia in 1984
and 1985 to the Contras and to other contributions by Far East countries such as
Taiwan and China.

President Reagan's insistance that the Congressional ban - known as the Boland
Amendment - did not prohibit the Administration's seeking aid from other
countries, together with his assertion that he was "directly involved," signals
a defence which will rely on the President enjoying extraordinary powers over
the execution of foreign policy.

President Reagan's standing in the polls has fallen as a result of the Iran
scandal, but he said the affair had not wounded him mortally.

He said his own polls showed him with a 53 per cent public approval rating, the
highest rating for a President in his sixth year in office since Dwight
Eisenhower was in the White House at the end of the 1950s.

The hostage ransom is likely to be a source of high controversy in the coming
weeks.  President Reagan repeatedly insisted that his Administration would not
negotiate with terrorists holding hostages, but the ransom/rescue plan involved
money not just from the Texas millionaire Mr Ross Perot, but also Drug
Enforcement Administration agents and a Dollars 50,000 donation from the CIA.

The Administration neither notified Congress under the CIA oversight laws, nor
authorised the action under a Presidential "finding."

The use of DEA agents is sensitive because the DEA is the one federal agency not
subject to strict oversight.  Congress is concerned that the Administration may
have used the DEA as a substitute for the CIA.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              88 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 18, 1987, Monday

Markets Weight Up The Volcker Factor

BYLINE: Stewart Fleming

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 816 words

HIGHLIGHT:
Stewart Fleming on prospects for the Fed chairman's reappointment to a third
term


Mr James Baker, the US Treasury Secretary, is facing one of the most important
decisions he will make should be decide to use his considerable influence to
press President Ronald Reagan to reappoint Federal Reserve Board Chairman Paul
Volcker for a third term.

Mr Volcker's second term of office does not expire until August 6.  But an
administration which wants to demonstrate that it is functioning efficiently
after the Iran/Contra upheavals and which does not want to give the financial
markets any more cause for concern than they already have, will not want to
appear to be dithering about a decision which could have profound implications
for economic policy.

Already liability managers at commercial banks are taking the Volcker factor
into account in their day-to-day foreign exchange strategies.  If the markets
were to sense that the Fed chairman might not be offered another term (or was
refusing to accept it) the dollar could plunge if Mr Reagan did not quickly name
as a candidate one of the few individuals who could take the helm and command
Wall Street's confidence.

Last Thursday Washington was full of speculation that a decision about the Fed
chairman's position was not far off.  On this view the Reagan Administration
will not want to go into the economic summit in Venice early next month with the
question undecided, particularly if, as some informed observers suspect, the US
is hoping to get the industrial countries to agree to unveil a new dollar
support package there.

It is noted, too, that the last time President Reagan announced the
reappointment of Mr Volcker, albeit without wholehearted enthusiasm, was in June
1983.

The standard assessment of Mr Volcker's position in Washington is that with the
departure earlier this year of Mr Donald Regan from the job of White House Chief
of Staff, and the appointment of former Senator Howard Baker to replace him, his
chances of being offered another term - if he wants it - improved dramatically.

The fact that the financial markets are in a decidedly fragile state is another
factor seen to make it more likely that he will be offered the job.

Administration officials who are concerned about the dollar and share Mr
Volckers's concerns about the budget deficit, including Mr George Shultz, the
Secretary of State, who was Mr Volcker's boss when he was Treasury Secretary in
the Nixon Administration, will, it is assured, be inclined to reappoint him.

Mr Volcker has already made it clear what policies he is likely to pursue if
reappointed.

The Fed judgment seems to be that in this approach lies the interest of the
long-term health of the US economy and offers the best prospects for the
economic expansion to continue, even if only sluggishly.

Significantly when Mr Volcker announced he was tightening monetary policy to
defend the dollar on April 30, both the White House and Mr Baker indicated they
were backing his decision.

There are many in the Republican Party who are warning that just as he did in
1980 and 1981 Mr Volcker will apply the monetary brakes so vigorously in his
efforts to fight inflation that he will induce a recession which together with
the Iran scandal will be ruinous for the Republican Party's prospects in the
1988 presidential and congressional elections.

The alternative view, and the one which Mr Volcker is presenting, is that only
by maintaining the Fed credibility as an inflation fighter can the Central Bank
hope to avoid the sort of collapse of the dollar which will trigger a crippling
surge in long-term interest rates and a severe US recession.

Recent White House support for Mr Volcker's monetary policy initiatives suggest
that Mr Baker has so far accepted the logic of the Fed case.

If so there is little reason to run the risk of offering the job to a Volcker
clone to carry out the job which the existing Fed chairman is best qualified to
undertake.

After all, the first thing a new Fed chairman other than Mr Volcker will have to
do is earn his anti-inflationary spurs.  One of the big attractions of asking Mr
Volcker to serve again is that, because of their confidence in his judgement,
the markets are likely to tolerate a high rate of inflation under his monetary
policy rule than under any successor.

Most people in Washington assume that if President Reagan offers the Federal
Chairman another term he will, albeit reluctantly, take on the arduous and
ill-paid job again provided he feels confident that the Reagan Administration is
prepared to support the anti-inflationary dollar defence policies he has
signalled he intends to pursue.

To accept the job on any other terms would be to invite Washington's politicians
to blame the Central Bank for the economic ills which could lie ahead and in
effect to risk compromising the independence of an institution whose special
role in government he has spent much of his life defending.

LANGUAGE: ENGLISH

GRAPHIC: Picture Paul Volcker, laid out his policies

                   Copyright 1987 The Financial Times Limited


                              89 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 18, 1987, Monday

Volcker Factor Stirs The Markets

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; Back Page; Pg. 24

LENGTH: 910 words

HIGHLIGHT:
Stewart Fleming in Washington on the Federal Reserve Board chairman's future


Mr James Baker, the US Treasury Secretary, is facing one of his most important
decisions.  Should he decide to use his considerable influence to press
President Ronald Reagan to reappoint Federal Reserve Board chairman Paul Volcker
for a third term.

Mr Volcker's second term of office does not expire until August 6.  But an
Administration which wants to demonstrate that it is functioning efficiently
after the Iran/Contra upheavals and which does not want to give the financial
markets any more cause for concern will not want to appear to be dithering about
a decision which could have profound implications for economic policy.

Liability managers at commercial banks are already taking the Volcker factor
into account in their day-to-day foreign exchange strategies.  If the markets
were to sense that the Fed chairman might not be offered another term (or was
refusing to accept it) and Mr Reagan did not quickly name as a candidate one of
the few individuals who could take the helm and command Wall Street's
confidence, the dollar could plunge.

Last Thursday Washington was full of speculation that a decision about the
Federal Reserve Board chairman's position was not far off.  On this view, the
Reagan Administration will not want to go to the economic summit in Venice early
next month with the question undecided.  This is particularly true if, as some
informed observers suspect, the US is hoping to get the industrial countries to
agree to unveil a new dollar support package there.

It is noted, too, that the last time President Reagan announced the
reappointment of Mr Volcker, albeit without wholehearted enthusiasm, was in June
1983.

The standard assessment of Mr Volcker's position in Washington is that with the
departure earlier this year of Mr Donald Regan from the job of White House Chief
of Staff, and the appointment of former Senator Howard Baker to replace him, his
chances of being offered another term - if he wanted it - improved dramatically.

The fact that the financial markets are in a decidedly fragile state is another
factor which is seen as making it more likely that Mr Volcker will be offered
the job.

Administration officials who are concerned about the dollar and share Mr
Volcker's concerns about the budget deficit, including Mr George Shultz, the
Secretary of State, will, it is assumed, be inclined to reappoint him.

Mr Volcker has already made it clear which policies he is likely to pursue if
reappointed.  He has disclosed that the central bank is ready to raise US
interest rates to fight inflation and defend the dollar which he maintains has
fallen "absolutely and fundamentally" far enough.

Under him, the Fed's judgment seems to be that this approach addresses the
long-term interests of the US economy and offers the best prospects for economic
expansion to continue, even if it is sluggish.

Significantly, when Mr Volcker announced he was tightening monetary policy to
defend the dollar on April 30, both the White House and Mr Baker indicated that
they were backing his decision.

There are many in the Republican Party who are warning that, just as he did in
1980 and 1981, Mr Volcker will apply the monetary brakes so vigorously in his
efforts to fight inflation that he will induce a recession.  Together with the
Iran scandal this will be ruinous for the Republican Party's prospects in the
1988 presidential and congressional elections.

The alternative view, and the one which Mr Volcker is presenting, is that only
by maintaining the Federal Reserve's credibility as an inflation fighter can the
central bank hope to avoid a collapse in the dollar which would trigger a
crippling surge in long-term interest rates and a severe US recession.

Mr Volcker would add that the outlook would be better if President Reagan and
Congress could agree to attack the budget deficit and West Germany and Japan
adopted stimulative economic policies.

Recent White House support for Mr Volcker's monetary policy initiatives suggest
that Mr Baker has so far accepted the logic of the Fed's case.

After all, the first thing a new Fed chairman other than Mr Volcker would have
to do is earn his anti-inflationary spurs.  One of he big attractions of asking
Mr Volcker to serve again is that, because of their confidence in his judgment,
the markets are likely to tolerate a higher rate of inflation under his monetary
policy rule than under any successor's.

If Mr Baker does decide to support Mr Volcker's reappointment, he will be trying
not only his political fortunes but also, in effect, the presidential fortunes
of his close political friend, Vice-President George Bush to the monetary
policies of the Fed chairman.

It would be hard for Mr Bush to dissociate himself from a White House decision
in which his ally Mr Baker played a major role.

Most people in Washington assume that, if President Reagan offers Mr Volcker
another term, he will, although reluctantly, take on the arduous and ill-paid
job again, provided he feels confident that the Reagan Administration is
prepared to support the anti-inflationary dollar defence policies he has
signalled he intends to pursue.

To accept the job on any other terms would be to invite Washington's politicians
to blame the central bank for the economic ills which could lie ahead.  In
effect this would risk compromising the independence of an institution whose
special role in government Mr Volcker has spent much of his life defending.

LANGUAGE: ENGLISH

GRAPHIC: Picture Mr James Baker; Picture Mr Paul Volcker

                   Copyright 1987 The Financial Times Limited


                              90 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 18, 1987, Monday

Volcker Factor Stirs The Markets

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; Back Page; Pg. 24

LENGTH: 910 words

HIGHLIGHT:
Stewart Fleming in Washington on the Federal Reserve Board chairman's future


Mr James Baker, the US Treasury Secretary, is facing one of his most important
decisions.  Should he decide to use his considerable influence to press
President Ronald Reagan to reappoint Federal Reserve Board chairman Paul Volcker
for a third term.

Mr Volcker's second term of office does not expire until August 6.  But an
Administration which wants to demonstrate that it is functioning efficiently
after the Iran/Contra upheavals and which does not want to give the financial
markets any more cause for concern will not want to appear to be dithering about
a decision which could have profound implications for economic policy.

Liability managers at commercial banks are already taking the Volcker factor
into account in their day-to-day foreign exchange strategies.  If the markets
were to sense that the Fed chairman might not be offered another term (or was
refusing to accept it) and Mr Reagan did not quickly name as a candidate one of
the few individuals who could take the helm and command Wall Street's
confidence, the dollar could plunge.

Last Thursday Washington was full of speculation that a decision about the
Federal Reserve Board chairman's position was not far off.  On this view, the
Reagan Administration will not want to go to the economic summit in Venice early
next month with the question undecided.  This is particularly true if, as some
informed observers suspect, the US is hoping to get the industrial countries to
agree to unveil a new dollar support package there.

It is noted, too, that the last time President Reagan announced the
reappointment of Mr Volcker, albeit without wholehearted enthusiasm, was in June
1983.

The standard assessment of Mr Volcker's position in Washington is that with the
departure earlier this year of Mr Donald Regan from the job of White House Chief
of Staff, and the appointment of former Senator Howard Baker to replace him, his
chances of being offered another term - if he wanted it - improved dramatically.

The fact that the financial markets are in a decidedly fragile state is another
factor which is seen as making it more likely that Mr Volcker will be offered
the job.

Administration officials who are concerned about the dollar and share Mr
Volcker's concerns about the budget deficit, including Mr George Shultz, the
Secretary of State, will, it is assumed, be inclined to reappoint him.

Mr Volcker has already made it clear which policies he is likely to pursue if
reappointed.  He has disclosed that the central bank is ready to raise US
interest rates to fight inflation and defend the dollar which he maintains has
fallen "absolutely and fundamentally" far enough.

Under him, the Fed's judgment seems to be that this approach addresses the
long-term interests of the US economy and offers the best prospects for economic
expansion to continue, even if it is sluggish.

Significantly, when Mr Volcker announced he was tightening monetary policy to
defend the dollar on April 30, both the White House and Mr Baker indicated that
they were backing his decision.

There are many in the Republican Party who are warning that, just as he did in
1980 and 1981, Mr Volcker will apply the monetary brakes so vigorously in his
efforts to fight inflation that he will induce a recession.  Together with the
Iran scandal this will be ruinous for the Republican Party's prospects in the
1988 presidential and congressional elections.

The alternative view, and the one which Mr Volcker is presenting, is that only
by maintaining the Federal Reserve's credibility as an inflation fighter can the
central bank hope to avoid a collapse in the dollar which would trigger a
crippling surge in long-term interest rates and a severe US recession.

Mr Volcker would add that the outlook would be better if President Reagan and
Congress could agree to attack the budget deficit and West Germany and Japan
adopted stimulative economic policies.

Recent White House support for Mr Volcker's monetary policy initiatives suggest
that Mr Baker has so far accepted the logic of the Fed's case.

After all, the first thing a new Fed chairman other than Mr Volcker would have
to do is earn his anti-inflationary spurs.  One of he big attractions of asking
Mr Volcker to serve again is that, because of their confidence in his judgment,
the markets are likely to tolerate a higher rate of inflation under his monetary
policy rule than under any successor's.

If Mr Baker does decide to support Mr Volcker's reappointment, he will be trying
not only his political fortunes but also, in effect, the presidential fortunes
of his close political friend, Vice-President George Bush to the monetary
policies of the Fed chairman.

It would be hard for Mr Bush to dissociate himself from a White House decision
in which his ally Mr Baker played a major role.

Most people in Washington assume that, if President Reagan offers Mr Volcker
another term, he will, although reluctantly, take on the arduous and ill-paid
job again, provided he feels confident that the Reagan Administration is
prepared to support the anti-inflationary dollar defence policies he has
signalled he intends to pursue.

To accept the job on any other terms would be to invite Washington's politicians
to blame the central bank for the economic ills which could lie ahead.  In
effect this would risk compromising the independence of an institution whose
special role in government Mr Volcker has spent much of his life defending.

LANGUAGE: ENGLISH

GRAPHIC: Picture Mr James Baker; Picture Mr Paul Volcker

                   Copyright 1987 The Financial Times Limited


                              91 of 614 DOCUMENTS

                        Financial Times (London,England)

                            May 20, 1987, Wednesday

North 'Expected To Be Made Fall Guy Over Contras'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 281 words


The sacked White House aide, Lt Col Oliver North, expected to be made "the fall
guy" if the Reagan Administration's secret efforts to arm the Nicaraguan Contra
rebels were exposed, a key witness testified in the Iran/Contra hearings
yesterday.

Mr Robert Owen, Col North's courier in the Contra supply operation, said that
both men had joked about going to jail for their efforts. But he ended his
testimony last night with a long personal poem about fighting for freedom in
Nicaragua and a proclamation that "I love Oliver North like a Brother."

Mr Owen, a boyish-looking 34-year-old who lost a brother 20 years ago in the
Vietnam war, earlier told the House Senate panel that he believed Col North
would eventually be seen as "an American hero," not "a villain." Mr Owen was
asked by Senator Daniel Inouye, the Haiwaii Democrat, who lost an arm in the
Second World War, if he (Inouye) could still be deemed a patriot, if he
disagreed with President Reagan's policies in Central America.  "You are a great
American," Mr Owen told a somewhat bemused Senator Inouye.

Patriotism was the main theme in yesterday's hearings although Mr Owen
elaborated on his role as a courier for Col North in 1985 and 1986.  He
described how he handed up to Dollars 30,000 to between six and 10 contra
leaders during the Congressional ban on US military aid.

He also disclosed that he was involved in supplying the Contras with weapons
while working for the US-sponsored Nicaraguan Humanitarian Assistance
Organisation, which sent medical supplies to the Contras.

Separately, Mr Owen suggested that Mr William Casey, the former director of the
CIA, was well aware of Col North's activities.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              92 of 614 DOCUMENTS

                        Financial Times (London,England)

                            May 20, 1987, Wednesday

Irangate Documents

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 31 words


Hundreds of Swiss bank documents recording transactions by key participants in
the Iran-Contra scandal will soon be released to US investigators, Swiss
officials in Geneva said.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              93 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 21, 1987, Thursday

Contra Leader Depended Heavily On Saudi Aid

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 461 words


Mr Adolfo Carlero, the Coco Cola bottling plant manager who became a Nicaraguan
contral rebel leader, yesterday appeared before the Iran-Contra hearings on
Capitol Hill and described himself as a "knight in democratic armour."

But Mr Calero was more a crusader unhorsed as he faced a barrage of questions
about his personal finances and his rebel movement, the FDN, whose troops number
around 15,000 and are based in northern central America.

In his testimony, Mr Calero made clear he was totally reliant on Saudi Arabia to
fund those troops during the 1984-86 congressional ban on US military aid which
halted earlier CIA support.  The Saudis contributed Dollars 32 m out of a total
contributions to the FDN of Dollars 33.6 m.

His dependence on the sacked White House aid, Lt Col Oliver North, was also
revealed to the House-Senate panel.  He met Col North 50 times, told him
everything, took his orders, discussed military tactics and even went to
designated arms dealers.

Under questioning, Mr Calero agreed he had given Col North some Dollars 90,000
to help fund a secret mission to free American hostages held in Lebanon, "I
gladly did it," he declared.

He explained that of Dollars 33.6 m received, some Dollars 19 m was spent on
arms, some from Eastern Europe.  About Dollars 14 m went on non lethal aid such
as jungle boots, food, medicine and uniforms.  Though some Dollars 5.5 m remains
unaccounted for, Mr Calero said he had "trunkloads of invoices" and had offered
them to the committee.

At times, he appeared a rebel whose cause had been temporarily forgotten.  "What
is really on the scale is American resolve to stand by its friends' principles
and allies."

He was asked why he and Col North dealt in travellers cheques.  He explained
that it was much easier, and there was less commission to pay.

The committe produced records of some of the travellers cheques showing that Col
North had spent hundreds of dollars on personal items such as food and a pair of
snow tyres at local stores in Washington.

In the afternoon, the committee heard testimony from Major General John Singlaub
who retired after 35 years' service in the US army following his public
criticism of President Carter's decision to cut the number of US troops, in
South Korea.

Gen Singlaub, wearing a severe crew cut, said he had fought totalitarian regimes
for most of his life, starting with a parachute drop behind Nazi lines to help
the French resistance.  His OSS case officer in London at the time was Mr Casey.
Gen Singlaub also liberated Pows in Japanese camps.

Gen Singlaub said he had approached two countries - one believed to be Taiwan -
for bullets and guns for the Contras during the ban on aid.  He kept in regular
touch with Col North throughout.

LANGUAGE: ENGLISH

GRAPHIC: Picture ADolfo Calero, flashes of black humour

                   Copyright 1987 The Financial Times Limited


                              94 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 22, 1987, Friday

Reagan 'Violated Constitution Over Contras'

BYLINE: Nancy Dunne, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 443 words


The Iran/Contra hearings adjourned yesterday after two days of damaging
disclosures for the men who masterminded both the Iranian arms sale and the
arming of the Nicaraguan rebels.

President Ronald Reagan came under attack in Congress for insisting that laws
prohibiting aid to the Contras did not apply to him.  Mr Jim Wright, the House
Speaker, said the President had violated the spirit of the Constitution by
refusing to execute the laws passed by Congr ss, and Mr James Florio, a New
Jersey Democrat, accused the President of having "lied" in claiming that he had
not participated in getting aid for the Contras.

The President's involvement was dramatised in testimony yesterday by three
wealthy conservatives, who said they had been briefed about the needs of the
Contras for humanitarian assistance and weapons by high administration officials
before being solicited for private donations by Mr Carl Channell, a fundraiser.
Mr Channell pleaded guilty last month to involvement in tax fraud.

Mr William O'Boyle, an affluent New Yorker, said Lt-Col Oliver North, the fired
National Security Council aide, had told him of a secret plan in case it was
necessary to "liberate" Nicaragua and had briefed him about an airport being
built by the Sandinista regime "to recover the Russian backfire bombers after
they had made a nuclear attack on the US."

In Col North's presence, Mr Channell had told Mr Boyle that a Dollars 300,000
donation could get him a meeting with President Reagan.  However, Mr Boyle gave
only Dollars 165,000 - enough to buy two small cargo planes and other equipment
- so he never met the President.

The testimony of the wealthy "true believers" who said they were trying to
defend the US against communism followed the appearance of Maj-Gen Richard
Secord, a key figure in the arms deal, and others who portrayed themselves as
patriots trying to carry out President Reagan's policies.

Those images have begun to tatter.  Yesterday Maj-Gen John Singlaub testified
that he had supplied the Contras with weapons at cost but had been frozen out of
future deals by Col North.  Instead the business went to Gen Secord, who made a
profit.

Gen Secord, who had promised to co-operate with investigators, came under fire
yesterday for reportedly blocking the release of Swiss bank records connected
with the arms deals.

The central figure in the drama, Col North, was said on Wednesday to have spent
money meant for the Contras on groceries, snow tyres and personal items.  The
damage can be expected to continue when the hearings resume next Wednesday with
the testimony of Mr Albert Hakim, Gen Secord's business manager.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              95 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 28, 1987, Thursday

Contra Supply Chief 'Served President'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 566 words


A retired US air force colonel who managed a private air re-supply network for
the Nicaraguan Contra rebels yesterday testified that he was under the
impression he was working for President Reagan.

Col Robert Dutton, a combat pilot decorated for bravery in the Vietnam war, told
the Iran-Contra hearings that his mission was similar to his role in a 1979
mission code-named "Honeybadger" to rescue American hostages in Iran.

But a contrasting picture of a more unofficial operation emerged from later
testimony by Cuban-born Mr Felix Rodriguez, a former CIA agent and Bay of Pigs
veteran, who supported the Contra aid network through contacts at the Ilopango
air base in El Salvador, next to Nicaragua.

Mr Rodriguez who said he had spent his life fighting communism all over the
world, spoke of profiteering and incompetence in a highly critical description
of the Contra re-supply operation run by Lt Col Oliver North, the sacked White
House aide, and Gen Richard Secord, the retired US air force major.

Mr Rodriguez, alias Max Gomez, retired from the CIA in 1976 after a CIA career
spanning most Latin American countries and highlighted by his role in the
capture and interrogation of Che Guevera, the Marxist guerrilla leader in the
Bolivian jungle.  In 1970 he (like Col Dutton) went to Vietnam and developed the
"helicopter concept" - sweeping tree-top level forays against the insurgents in
Vietnam.  He took his concept to El Salvador more than 10 years later.

In September 1985, Mr Rodriguez received a letter from Col North asking him to
obtain space at Ilopango airport to maintain aircraft.  A second Bay of Pigs
veteran later informed him that some "heavy stuff" was due to arrive - rifles,
guns and ammunition which over the first few months of 1986 amounted to 500,000
lbs of military equipment.

During this period, US military aid for the Contras was banned by Congress.  Mr
Rodriguez, in a heavy Spanish accent, said he agreed to help Col North because
he believed in the Contras' anti-Communist cause.

He said the operation was plagued by incompetence.  The cargo planes were
ancient, car radar detectors were used on night flights, and one mechanic sent
from Washington drank 60 beers in two days and had to be sent home.  Above all,
Mr Rodriguez said he discovered that Mr Secord was charging up to 200 per cent
profit on the sale of hand grenades.

Mr Rodriguez said he decided to quit the operation and agreed under questioning
that he was worried about profiteering.  On three occassions during this time he
met Vice-President George Bush, but he never discussed the re-supply operation
or Nicaragua, only his role in helping the El Salvador Government crack down on
Communist rebels which he described by showing Mr Bush a photo album.

Mr Dutton, who was hired by Mr Secord to run the covert operations the day after
retiring from the US air force in May 1986, said that Col North had asked him to
prepare a photo album for the "top boss," whom he believed was President Reagan.

This contained air drop zones and other parts of the Contra supply operation and
has subsequently been tested for finger prints.  Mr Arthur Liman, the chief
Senate counsel, said that no evidence had been found of Mr Reagan's
fingerprints.

Col Dutton quoted Col North as saying: "You'll never get a medal for this, but
some day the President will shake your hand and thank you."

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                              96 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 29, 1987, Friday

Reagan Pledges To Veto Any Tax Increases

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 459 words


President Reagan vowed yesterday to veto any legislation sent to him by Congress
that "raises the American people's taxes," and promised to spend his last two
years in the White House "setting America on the road to eliminating the
(Federal budget) deficit."

At the same time, in a speech to the National Association of Manufacturers in
Washington, he said that at the economic summit in Venice early next month he
would ask the leaders of the other six major industrial countries to stimulate
their economies, and would pledge that the US would "finish putting our own
house in order."

He vowed to campaign around the country "asking the American people to help keep
the deficit-spenders in Congress from wrecking America's economic future."

His speech seemed designed both to shore up his negotiating position before the
battles with Congress over the Budget, and to provide him with a domestic policy
agenda which would permit him to present himself as an active political leader.

Mr Reagan's comments, and remarks yesterday by Mr David Mulford, the Assistant
Treasury Secretary for International Affairs, suggest that Venice will not see a
major breakthrough on economic policy co-ordination among the industrial
countries.

For that, most economists believe, the president would have to accede to
significant tax increases.

Mr Reagan faces bitter struggles on Capitol Hill over budget priorities, not
only on tax policy, where even conservative Democrats such as Senator Lloyd
Bentsen, the Texan who chairs the powerful Finance Committee, hint at the need
for increases in taxes, but also over his defence priorities, including the
so-called "Star Wars" Strategic Defence Initiative.

Throughout the year as the Iran-Contra scandal occupied the headlines, the
Democratic-controlled Congress has had the White House persistently on the
defensive.

But Mr Reagan's remarks yesterday had the optimistic ring of some of his old
campaign speeches.

He vigorously defended his Administration's economic policy record, claiming, in
the face of widely expressed fears about declining US competitiveness, that
"America has once more become the world's technological dynamo."

He dismissed charges by leading Democrats that the American middle class was
shrinking, and rejected polling data which implied that the American people want
more spending.

"The American people," Mr Reagan said, "don't want more spending.  They want
better results."

In spite of his efforts in recent months to present himself as a vigorous
leader, Mr Reagan has so far failed to restore his battered credibility or his
job approval ratings in the polls.  There is little evidence in the polls,
either, to suggest widespread public support for his budget priorities.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              97 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 29, 1987, Friday

Cuban CIA Agent Tells Of Contra Arms Profiteering

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 264 words


A former CIA agent yesterday testified that he was worried about profiteering in
the private aid network set up by Lt Col Oliver North to support the Nicaraguan
Contra Rebels.

Mr Felix Rodriguez. a Cuban exile and Bay of Pigs veteran said he reported his
concern to a top aide to Vice President George Bush last year and then quit the
undercover organisation.

During cross examination before the House-Senate panel investigating the
Iran-Contra affair, Mr Rodriguez described in detail how the ranshackle
operation overcharged for weapons supplied to the Contras and how pilots were
underpaid for making dangerous airdrops in Nicaragua.

Senator Warren Rudman, the New Hampshire republican who has emerged as the
senator most likely to turn up the timely and quotable phrase, asked Mr
Rodriguez if he agreed the operation engaged in "flesh peddling."

"Yes sir," replied Mr Rodriguez in his thick Spanish accent.

Mr Rodriguez said he helped maintain Contra supply aircraft at a base in El
Salvador.

Later Mr Lewis Tambs, former US ambassador to Costa Rica and now a history
lecturer at Arizona State University, told the committee he had been instructed
by Col North to open a southern front for the Contras.  This involved
constructing a secret airfield in Costa Rica for sending supplies.

Described as a "rock 'em, sock 'em" diplomat, Mr Tambs said he assumed that Col
North was carrying out official US policy and therefore took orders from him.

He conceded that he was frustrated that some US officials now seemed to be
backing away from assuming responsibility.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              98 of 614 DOCUMENTS

                        Financial Times (London,England)

                              June 1, 1987, Monday

Israel 3;
Painful Change Towards Exports

BYLINE: Andrew Whitley

SECTION: SURVEY; Pg. 21

LENGTH: 1147 words


The armoured car snarled, lurched forward and dipped down the side of a steep
wadi.  Shifting into low gear, the driver gunned the engine hard and went
straight for the opposite wall of the dried-out gully.  As the vehicle shot over
the other side, a bedouin nomad camped nearby looked round in surprise.

The desolate moonscape of the Negev desert provides an ideal proving ground for
the rugged vehicle, manufactured at the nearby Ramta division of Israel Aircraft
Industries.  With its US Dollars 125,000 price tag a cheap and versatile option
for Third World armed forces, the RAM has found ready buyers abroad over the
past four years.

Ramta, which also makes a fast missile boat, in service in Sri Lanka against the
Tamil guerrillas, is one of the state-owned company's smaller divisions.  Tucked
away in the Negev, out of the limelight afforded to IAI's more glamorous
products such as the new Lavi combat aircraft, the changes Ramta is now going
through mirror the transformation of the Israeli defence industry as a whole.

A US Dollars 2.5 bn business with tentacles extending into almost every corner
of the country's economic life, the industry is currently going through a
painful internal reorientation - away from its prime function as a support arm
of the large Israeli Defence Forces towards the export of an increasingly
sophisticated range of military equipment.

Since the end of the Lebanon war in mid-1985, some 6,000 employees - 10 per cent
of the workforce in defence-related companies - have been laid off, a
significant number in a small country like Israel.  And, according to the
Defence Ministry, as a result of an overall 15 per cent cut in orders placed
with the local industry, another 3,000 will have to go in the near future.

Exports, meanwhile, are climbing steadily as a proportion of total output.
According to one knowledgable source, Israel's military exports in 1986 exceeded
US Dollars 950 m - up significantly on the previous year - representing 40 per
cent of total output.  IAI alone was responsible for two-thirds.

Notwithstanding, the clandestine export of weapons to Iran by Israel revealed by
the "Iran-Contra" scandal, the nature of the trade is undergoing an important
change of direction and character.  Moving away from the sale of equipment
surplus to its own needs to Third World countries - the origin of the country's
arms exports business - Israel is increasingly manufacturing specifically for
the foreign market, particularly for Nato.

"Latin America is no longer a good market, it doesn't pay," comments one Western
diplomat.  Instead, Israeli defence companies are making steady headway in the
US, selling everything from gas masks and tank mine ploughs to state-of-the-art
electronic goods.  "The door is open to the States, and over the past two years
they have been doing very well," the diplomat says.

Most of the orders which have been publicly announced have been relatively
small-scale.  But a juicy Dollars 100 m contract for the development and
manufacture of an anti-tactical missile device - part of the Pentagon's Star
Wars programme - is currently in prospect.

Companies like Elta, another IAI subsidiary, and one of the brightest stars in
the Israeli defence firmament, have seen their sales curves grow strongly in
recent years, despite the cutback in domestic orders.

While still exporting bread-and-butter items such as a simple "look down" radar
developed after the 1967 Middle East War ("20 per cent of the cost for 80 per
cent of our competitors' performance" is the marketing slogan), Elta's
specialisation these days is in such top-secret areas as artificial intelligence
systems and the eavesdropping devices.

Since 1981, Elta's sales have grown from US Dollars 70 m to a forecast Dollars
182 m this year, a performance which owes nothing to a captive local market as
Dr Nino Levy, its managing director, emphasises.

Pointing out that the Dollars 1.8 bn in Foreign Military Sales grants provided
annually by the US to Israel means, in essence, that Israeli companies are
always having to compete against their much bigger American counterparts, Dr
Levy argues that "this is probably the most unprotected defence industry in the
world."

Meanwhile, prodded by the Ministry of Defence, a start is being made to tackling
the waste and duplication of functions which characterise an industry which has
grown up in fits and starts, responding to specific - often urgent - military
needs.

For example, IAI which, with 20,000 employees and annual sales exceeding Dollars
1 bn dominates the sector, has recently merged its mini-RPV (remote pilotless
vehicle) business with that of its former rival, Tadiran.

But foreign analysts point out that there is still a considerable overlap in
work performed by IAI and by Rafael, the armaments research and development
concern.  Rafael is in the running for a large share of a DM 700 m helicopter
upgrading project for the West German forces, providing infra-red night-vision
equipment.

As elsewhere, the Israeli defence industry is becoming increasingly integrated
with those of its competitors and customers.  South Africa and Taiwan
manufacture Israeli-designed boats and missiles under licence; Ramta makes
aircraft seats for Grumman under a typical offset purchase deal; while Elta does
sub-contract work for US giants such as Hughes and Westinghouse.

The industry has done a great deal in recent years to improve its product
development and marketing, but simultaneously has been dealt a double blow - by
the cuts in Israel's own defence budget, and the sharp decline in the
international value of the US dollar.  As nearly all defence contracts are
quoted in dollars, rising domestic costs have played havoc with the Israeli
industry's economics.

"Our companies are accepting export orders where the profit margin is very small
or are even selling at a loss, so as to stay alive," says a senior Defence
Ministry official.  "But this cannot continue for long."

The Government's reluctant decision earlier this year to ban new arms exports to
South Africa can have only a detrimental effect.

And if the controversial Lavi project is cancelled, the effect on the industry
as a whole would be shattering.  "It is inconceivable.  I just cannot imagine
it," says an executive of IAI, the aircraft's main contractor.  Much of the work
IAI nowadays sub-contracts to other, smaller Israeli defence suppliers would
have to be brought back in-house.  And, as the ripples spread, closures would be
inevitable.

Ever since General de Gaulle of France embargoed the sale of arms to Israel
during the June 1967 Arab-Israeli war, Israel has been obsessed with the need to
be as independent as possible from foreign arms suppliers.  Preserving the
industrial structure built up largely over the past 20 years thus remains a
government imperative.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              99 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 2, 1987, Tuesday

CIA Officers Implicated Over Aid For Contras

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 3

LENGTH: 375 words


The former CIA station chief in Costa Rica has implicated at least two other
senior CIA officers with knowledge of the secret operation to arm the Nicaraguan
Contra rebels during a Congressional ban on US military aid.

Mr Tomas Castillo told the Iran Contra hearings that Mr Alan Fiers, head of the
CIA's Central American task force, and another unnamed officer who became head
of the CIA's Latin American division last year, were aware of the re-supply
operation.

In five hours of closed-door testimony last Friday, Mr Castillo also
contradicted an assurance by the CIA's chief of covert operations that the
agency was not even indirectly involved in the operation, disguised as a private
aid network.

Mr Castillo's statements, though far from conclusive, raise questions about the
extent of official knowledge of the secret and possibly illegal Contra aid
network set up by Lt Col Oliver North, the sacked White House aide.

Today Mr Elliott Abrams, the Assistant Secretary of State for Latin American
Affairs, will be the first senior Reagan administration official to appear
before the congressional hearings which are now in their fifth week.

Mr Abrams chaired a secret Restricted Interagency Group whose members included
Col North and Mr Fiers, which kept in close touch with the Contra aid programme.

Mr Abrams, a zealous anti-Communist, has been accused of misleading Congress in
earlier testimony to at least one other committee on the Contra aid effort.  He
faces hostile questioning about his role in soliciting funds and his
relationship with Mr William Casey, the former head of the CIA, who some believe
masterminded the covert aid programme between October 1984 and 1986.

Mr Castillo - an alias used to protect the CIA agent's real name - was asked
about a statement last October by Mr Clair George, the CIA covert operations
head, who told a Congressional intelligence panel: "The CIA is not involved
directly or indirectly in arranging, directing or facilitating resupply missions
co-ordinated by private individuals in support (of the Contras)."

Mr Castillo - subsequently disciplined by the CIA for his role as a go-between
in the resupply operation and now retired - replied: "I would have to disagree
with that."

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                   Copyright 1987 The Financial Times Limited


                              100 of 614 DOCUMENTS

                        Financial Times (London,England)

                            June 3, 1987, Wednesday

Shultz Told Aide To Watch Over North's Contra Operations

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 385 words


Mr George Shultz, US Secretary of State, ordered the senior State Department
official in charge of Central American policy to keep a close eye on Lt Col
Oliver North, the Iran-Contra hearings were told yesterday.

Mr Elliott Abrams said he was told to "monitor Ollie" in September 1985, shortly
after the first public reports of Col North's activities in support of the
Nicaraguan Contra rebels.

Over the next 12 months, the peak of the covert fund-raising and arms supply
operation run by Col North, Mr Abrams did not report any doubts to Mr Shultz nor
did he ask Col North specific questions about his role.

He only asked Col North whether he was obeying the Congressional ban on official
aid.  "I have not solicited a dime," Col North said.

Senator Howell Heflin, commenting on Mr Abrams' testimony, said it was "hear no
evil, see no evil, report no evil."

Under cross examination, Mr Abrams admitted he had given misleading testimony to
Congress on several occasions about the Contra aid network.

He had said there was no US government involvement in the air cargo plane which
crashed last October in Nicaragua, a statement he described yesterday as
"completely honest, but completely wrong."

He also gave a misleading statement to Senators about foreign financial support
to the Contras, failing to disclose a Dollars 10 m donation from the Sultan of
Brunei.  Yesterday, Mr Abrams apologised but justified his answers on the
grounds of confidentiality.

Mr Abrams denied that he had run the covert Contra aid operation by chairing a
"restricted inter-agency group" (RIG) whose members included a senior CIA
officer and Col North.

Mr Abrams said Col North had suggested at a RIG meeting that the Contras should
seize a Nicaraguan town on the Atlantic coast and defend it to the last man,
like the US capture of Khe Sanh in the Vietnam war.  "It was supposed to be an
Alamo style fight to change public perceptions of the Contras," he said.

But the Pentagon objected.  They said it was the craziest idea they had ever
heard.

The special prosecutor in the Iran-Contra affair, Mr Lawrence Walsh, is to meet
the House-Senate panel today to discuss granting immunity to Col North.  Mr
Walsh is believed to be pressing for a delay so that he can pursue his criminal
case against Col North.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              101 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 4, 1987, Thursday

Key Irangate Figure Set Up Fund For North

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 473 words


The Iranian-American businessman who served as the Reagan Administration's
financial mastermind in the covert Iran and Contra policies set aside a Dollars
200,000 death benefit for the family of Lt Col Oliver North, the sacked White
House aide.

Mr Albert Hakim said he did not tell Col North directly about the money which he
deposited in a secret Swiss bank account.  The life assurance plan was aimed at
paying for the college education of Col North's two boys and two girls in the
event of Col North's death.

The disclosure, to a hushed Senate Caucus Room in the Iran-Contra hearings on
Capitol Hill, came just hours after Mr Lawrence Walsh, the special prosecutor in
the affair, said Col North did not deserved immunity protection in order to
testify on his role in the affair.

Mr Walsh, who is aiming to indict Col North in his criminal inquiry, urged the
committee to delay granting the marine Lt Col immunity from prosecution.  A
decision is expected before the end of the week.

Mr Hakim said he set up death benefit account in May 1986, shortly before Col
North and Mr Robert McFarlane, President Reagan's former national security
adviser, flew to Tehran to talk to Iranian government officials.  The aim was to
discuss arms deals and the release of American hostages held in Lebanon by
pro-Iranian extremists.

Mr Hakim, accompanied by two lawyers, was asked if he had attempted to
compromise a senior US government official.  "I really loved this man," said Mr
Hakim, who controlled foreign bank accounts and off-shore companies which
handled the proceeds of the Iran arms sales and private contributions to the
Nicaraguan Contra rebels.

Mr Hakim also said that a business associate of Col North met Mrs North and
discussed the North family's needs and revealed that there was some discussion
of finding her a job with a real estate developer.  "My only intention was to
help," he said.

Earlier records obtained by the House Senate committee show that Col North
cashed around Dollars 2,000 of cheques for groceries, hosiery, and snow tyres
from money received from the Contra leader Mr Adolfo Claero.  The disclosure has
caused some committee members to question the defence of Mr Hakim's business
associate retired Air Force general Mr Richard Secord that the Contra supply
operation was a non profit organisation run by patriots.

Mr Hakim, who said that he had attended White House meetings and understood he
was working on behalf of the President of the US, originally proposed setting up
a Dollars 500,000 death benefit for Col North.  But Mr Secord said it was
excessive and said that Col North had a different lifestyle from him (Secord).

Mr Hakim, in his testimony, acknowledged on several occasions that he regarded
the Iran arms sales and the Contra weapons sales as opportunities for making a
profit.

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                   Copyright 1987 The Financial Times Limited


                              102 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 4, 1987, Thursday

Democrats Say Abrams Will Have To Resign

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 6

LENGTH: 256 words


Senior Democrats on the House-Senate panel investigating the Iran Contra affair
yesterday said that President Reagan's "point man" for Nicaragua, Mr Elliott
Abrams, will be forced to resign because he had misled Congress about aid to the
Contra rebels.

But Mr Abrams said he still had the support of Mr George Shultz, US Secretary of
State.

Mr Abrams also said yesterday he felt betrayed by the former White House aide Lt
Col Oliver North and wished that he had done a better job on checking on his
activities in support of the Nicaraguan Contra rebels.

But, under a second day of questioning by the House-Senate panel investigating
the Iran-Contra affair, Mr Abrams, a fleet-footed former lawyer again steered
clear of any admission that he himself may have broken any laws or engaged in a
cover up of Col North's activities.

At one dramatic moment during yesterday's cross examination, he was asked by the
crusty congressman from Florida, Rep Dante Fascell, Chairman of the House
Foreign Affairs Committee, whether the controversy over Col North's operation
had almost destroyed the Contras.

Mr Abrams said: "I share that fear, and I hope its wrong."

Asked repeatedly why he had shown a lack of curiousity about Col North's
involvement with the Contras during the 1984-86 congressional ban on US military
aid, Mr Abrams said he felt betrayed by Col North.  But on Tuesday, the
39-year-old assistant secretary of state for Inter-American Affairs, admitted
that he had only asked one question: "Are you breaking the law?"

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                   Copyright 1987 The Financial Times Limited


                              103 of 614 DOCUMENTS

                        Financial Times (London,England)

                              June 5, 1987, Friday

North 'Altered' White House Memo On Contras

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 276 words


The Iran-Contra select committee was expected to vote yesterday on whether to
delay giving immunity to Lt Col North, amid further embarrassing revelations
about the marine's role in the scandal.

The Wall Street Journal reported yesterday that Col North and his secretary Ms
Fawn Hall has altered a White House memo in which he urged that President Reagan
be briefed on private efforts to aid the Nicaraguan Contra rebels.

Since the Iran Contra scandal broke last November 25, President Reagan has
denied that he knew that profits from the Iran arms sales were diverted to the
Contras during a congressional ban on US aid.  The question of the President's
knowledge and involvement is central to the committee's inquiry.

The Journal report said that Col North withdrew the memo and three others from
the National Security Council last November 21, just before the Justice
Department launched an investigation into the affair.

The original memo apparently suggests that Col North thought he was carrying out
the President's wishes, but contains no evidence that the President ordered his
aide to set up a private network to circumvent the congressional ban.

On Wednesday, Mr Lawrence Walsh, the independent counsel leading a criminal
investigation, said that he did not believe that Col North deserved immunity.
He said it would be "ideal" if immunity was denied but he would settle for a
delay.

The committee however is unlikely to deny immunity - which allows a witness to
testify without his evidence being used against him.  But they may concede a
short delay to give Mr Walsh more time to prepare his criminal case against Col
North.

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                   Copyright 1987 The Financial Times Limited


                              104 of 614 DOCUMENTS

                        Financial Times (London,England)

                              June 8, 1987, Monday

Many Leaders, But A Lack Of Leadership

BYLINE: Stewart Fleming, Philip Stephens, John Wyles

SECTION: SECTION I; Editorial; Pg. 24

LENGTH: 1761 words

HIGHLIGHT:
Stewart Fleming, Philip Stephens and John Wyles at the opening of the Venice
Summit


Political hype and extravagant media attention have traditionally focused
unreasonable expectations on world economic summits.  Perhaps, however, the
disappointments of past years are now beginning to weigh more heavily.

Certainly, this year's two-and-a-half day gathering in Venice, which opens this
evening with discussions over dinner in the sixteenth century Ca' Grande, seems
to carry fewer hopes than most of its predecessors.

Partly this is because the political authority of all seven leading participants
has been muted for one reason or another.  Partly it is because governments of
the Western world's seven leading industrialised countries have barely begun to
develop a collective strategy for dealing with growing economic and political
problems.

President Ronald Reagan, by his office the natural leader of the West, arrives
in Venice the most seriously handicapped.  His domestic credibility is gravely
diminished by the Iran-Contra scandal and national attention is increasingly
focusing on finding a new president and electing a new Congress in 1988.

Neither Japan's Prime Minister, Mr Yasuhiro Nakasone, nor Mr Amintore Fanfani,
Italy's caretaker Prime Minister, who is hosting the gathering, are expected to
see out the year in their present positions.  But both are deeply concerned
about Mr Reagan's ability to contain protectionist fires in the US Congress and
provide confident Western leadership in his dealings with Mr Mikhail Gorbachev.
As storm clouds gather increasingly over the Gulf, the President's abilities
have come further into question.

This crucial sense of fading leadership - Chancellor Kohl has lost regional West
German elections, Mrs Thatcher is sacrificing less than a day of her re-election
bid to be at the summit and Mr Brian Mulroney of Canada is sinking in the
opinion polls - does not encourage optimism over the summit's prospects.

The challenge is clear: the seven leaders must take at least a small step
towards more collaborative economic and political relationships which would
compensate for the relative weakness of the US economy.

In the arena of economic policy, evidence of forward momentum towards more
co-operative leadership is urgently needed.

Enormous current account imbalances among the industrial countries are posing
the most serious threat to world economic growth since the acceleration in US
inflation and the second oil shock at the end of the last decade.  The
Organisation for Economic Co-operation and Development expects world growth of
little more than 2 per cent this year and sees scarcely better prospects next
year.

The foreign exchange markets are watching the outcome of the summit with
anxiety.  They fear that unless there is a major shift in policy - involving the
US making substantial cuts in the budget deficit and Japan and West Germany
significantly boosting growth rates - the dollar may fall much further.

The credibility problem is all the more acute because each participant
recognises that Venice cannot yield substantive new initiatives beyond what was
agreed in the Louvre accord in Paris last February, the first joint commitment
by the major industrialised countries to currency stability.  It was backed up
by promises of co-ordinated economic policy initiatives and understandings about
acceptable exchange rate fluctuations.

The extent to which these commitments have helped to stabilise the currency
markets is a moot point.  Stepped up intervention by central banks has
undoubtedly been a factor working towards currency stability.  The fact that the
industrial countries have provided the markets with some official leadership has
also been a stabilising factor.  So too has the Federal Reserve Board's
demonstration that it is willing to raise interest rates to defend the dollar.

But follow through on the domestic economic policy changes by the US, Japan and
West Germany has lagged behind.

Japan has moved some way with its pre-summit announcement of a Y 6,000 bn
(Dollars 40 bn) package of expansionary measures.

The move has been cautiously welcomed by the other summit participants who can
be expected, therefore, to refrain from "Japan bashing." But the likely impact
on Japanese growth, and Mr Nakasone's ability to push the package through an
obstructive parliament, remain crucially uncertain.

West Germany has not even gone that far.  Although its economic growth rate is
expected to slow to perhaps only 1.5 per cent this year, the Bonn Government has
resolutely refused to adopt expansionary measures ahead of a tax-cutting package
planned for next January.

Mr Baker had been using the threat of dollar devaluation to pressure Japan and
West Germany into adopting the macro-economic policies the US favours.  Now,
however, with the industrial countries including the US publicly committing
themselves to currency stability, Mr Baker's leverage is diminished.

Even the Reagan Administration itself has had to resort simply to promising that
the US budget deficit will decline by enough for it to claim that it is living
up to its side of the bargain.  The real confrontation on budget priorities
between the administration and the Democratic Congress will not begin until next
month.  Were the White House to signal in Venice that it is ready to concede a
significant increase in taxes to achieve a credible deficit reduction package,
it would be undercutting its own negotiating position with its political
adversaries in Washington.

Many suspect that some top advisers surrounding President Reagan including Mr
James Baker, the Treasury Secretary, do indeed want to strike a deal.  Whether
the President can be convinced is a question which is subject to intense, but
not well informed, speculation.

The summit's final communique will undoubtedly endorse the co-ordinated strategy
to stabilise the dollar agreed in Paris.

But serious reconsideration of underlying economic policies will have to wait
until the annual meeting of the International Monetary Fund in September.  It
will not be the first time summiteers will have reached for such an escape
hatch.

In the meantime, maintaining confidence in the dollar could prove even more
difficult.  President Reagan's decision last week to replace Mr Paul Volcker as
chairman of the Federal Reserve Board, the US central bank, by Dr Alan Greenspan
is a major factor.  Dr Greenspan is a man of solid reputation but limited
international experience.  He faces the task of building his credibility against
a background of nervousness over Congressional moves to pass a protectionist
trade bill, concern about inflationary pressures in the US economy and fears
that recent increases in interest rates to defend the dollar could undermine US
economic expansion.

Where the seven are going on policy co-ordination may seem obscure; but plans
are handling Third World debt are even more uncertain.  Their basic strategy,
built around negotiating separate solutions for individual countries seeking to
reschedule debts, will be reaffirmed and new initiatives promised to give
special relief for the poorest debtors, mainly in sub-Saharan Africa.  These
would involve, among other things, a move towards concessional interest rates.

Japan has stirred considerable interest by its talk of launching a special
Dollars 20 bn fund for debtor countries, but Mr Nakasone will be pressed hard
for details as to how the money would be distributed, and what proportion would
represent additional funds.

Citibank's decision last month to take a Dollars 3 bn loss on its Third World
loans by increasing its loan loss reserves has thrown a shadow over the way
forward.  While raising the prospect of greater flexibility in dealing with the
debt crisis, it leaves unanswered the problem of how to increase financial
resources to debtor countries when commercial banks are still failing to provide
the new loans envisaged under the so-called Baker plan for Third World growth.

Non-economic issues seem, in prospect, even more troublesome.  More often than
not a "joker" emerges in the two or three weeks before a summit.  This year,
President Reagan's desire for an allied contribution to Washington's attempt to
defend shipping through the Gulf has caused the allies some consternation.

Some, like Britain, question the Reagan Administration's wisdom in proposing to
allow Kuwaiti oil tankers to fly the American flag.

Some kind of common front will be necessary in Venice however.  Here the escape
hatch may be the United Nations.  Instead of pressing for an allied military
contribution in the Gulf, the US is now focusing upon a possible UN resolution
calling for a cease-fire backed with an embargo on the sale of arms.

On the other major foreign policy issue the summit will tackle - arms control -
the discussion may be smoother.  The West German government's success last week
in overcoming its internal divisions to endorse the "double zero option" should
enable Nato foreign ministers to give broad backing to the UN negotiating
position at their meeting this week in Reykjavik.

Relative allied unity on arms control, however, cannot conceal anxiety about
President Reagan's leadership of the Alliance, which was so badly bruised by the
near disaster at its Reykjavik summit with Mr Gorbachev and has been further
harmed by revelation in the Iran/Contras hearings and by the disarray that has
emerged in Washington over policy in the Gulf.

Aware of his weakening public image, Mr Reagan has begun to try and counter the
propaganda campaign Mr Gorbachev has mounted in Europe.

So far, however, Mr Reagan has failed to get his message across.  He is seen by
European officials, as well as large segments of the general public, as lacking
dynamism and competence and being out of tune with European preoccupations.

This European perception is, however, understood in Washington.  A recent
Congressional report on US-European relations concluded that over the past
decade, "judging from West European reactions to US policies and measured
against the goal of enhancing consensus in Nato the US has not been a very
effective Alliance leader." To be so, it added, the US "needs to take into
account European perspectives."

With Washington so preoccupied with its own economic problems, so intent on
blaming its trading partners for its difficulties and with a weakened
presidency, the summit will be hard-pressed to find convincing responses to the
problems at hand.  But since everyone involved needs a political success, the
final communique can scarcely claim less.

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caption; Drawing, no caption

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                              105 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 9, 1987, Tuesday

North's Phone Logs Destroyed Before Probe

BYLINE: Our Foreign Staff

SECTION: SECTION I; American News; Pg. 6

LENGTH: 347 words


Ms Fawn Hall, former secretary to Lt Col Oliver North, the ex-White House aide,
yesterday admitted that she had shredded his telephone records shortly before a
US Justice Department investigation interviewed him.

Appearing before the 26 men who make up the Congressional Committee
investigating the Iran-Contra affair, Ms Hall said she had destroyed the logs
last November, just before it was disclosed that up to Dollars 30 m in profits
from US arms sales to Iran had gone to the Nicaraguan Contra rebels.

Ms Hall, 28, stated she had "enormous admiration and respect" for Col North, who
worked tirelessly for his country.

He had been involved, she added, in highly secret operations - such as the US
bombing of Libya, the elimination of "death squads" in El Salvador, and the US
invasion of the Caribbean island of Grenada.

Ms Hall, delivering long-awaited testimony, said that, under orders of Col North
in November 1986 she altered originals of top-secret documents, thus concealing
US Administration ties with the Contras.

She admitted to having felt "uneasy" about the task, but said, "I believed in
Col North and felt he must have had a good reason.  She denied having known that
President Ronald Reagan had already ordered an inquiry and that Justice
Department investigators were due in Col North's office.

However, her handiwork was incomplete because, as she admitted yesterday, she
did not have time to transfer the alterations to various duplicate White House
files before investigators arrived.

One of the documents, a memo in 1985 to Mr Robert McFarlane, former National
Security Adviser to the president, discussed a Nicaraguan ship delivering arms
to the Sandinista government in Nicaragua and outlined the options of sinking or
seizing the ship, or publicising the shipment.

Ms Hall showed herself to have been a conscientious but incurious secretary.
She had never asked the Colonel about the cash which she and many others
believed he kept in his office, or about the travellers' cheques issued in the
same name of a bank in Central America.

LANGUAGE: ENGLISH

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                              106 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 9, 1987, Tuesday

Contra Questions To North 'Lasted Five Minutes'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 287 words


President Ronald Reagan's chief investigator of illegal US intelligence
activities questioned Lt-Col Oliver North in 1985 for five minutes only, as part
of an official inquiry into the colonel's support of the Nicaraguan Contra
rebels.

The inquiry was conducted in August 1985, when several US newspapers wrote
detailed accounts of how Col North, a middle-rank aide on the National Security
Council staff, was involved in private fund-raising on behalf of the Contras
during a Congressional ban on US aid to them.

Mr Bretton Sciaroni, a lawyer serving the President's Intelligence Oversight
Board told the Iran-Contra hearings in Congress yesterday that he interviewed
the chief counsel at the NSC, Commander Paul Thompson, for 30 minutes, and then
spoke to Col North very briefly in his White House office.

Congressman Tom Foley of Washington exclaimed: "And you consider this to be a
thorough investigation?"

Mr Sciaroni, once an academic at the Hoover Institute and the American
Enterprise Institute in Washington DC, specialising in public affairs, said he
had no experience of intelligence matters or investigations until he joined the
Intelligence Oversight Board.

He said that, during his investigation of Col North, he visited Commander
Thompson, who told him that some of Col North's files were not available for
inspection because they were personal and related to current intelligence
matters.  He had no powers to subpoena and took Col North's word that he was
"not involved in illegal activities."

Mr Foley asked: "Do you consider that you were given inadequate, incomplete
information?  Do you consider you were misled?"

Mr Sciaroni at first declined to answer, then said: "It would appear so."

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            June 10, 1987, Wednesday

White House 'Secrecy' Attacked

BYLINE: David Buchan, Nancy Dunne

SECTION: SECTION I; American News; Pg. 4

LENGTH: 259 words


The Reagan Administration was yesterday accused of secretly privatising American
foreign policy and of deceiving Congress.

At the end of six weeks of Iran-Contra hearings, Mr Lee Hamilton, the House
chairman of the investigation, warned that when the hearings resumed on June 22
they would focus on the failure under the constitution of the Administration to
be accountable to Congress and to conduct foreign policy openly.

Mr Hamilton said: "Our government cannot function cloaked in secrecy.  It cannot
function unless officials tell the truth.  The constitution only works when the
two branches of government trust one another and co-operate."

He quoted the remark by Mr Robert McFarlane, a former National Security Advisor,
who earlier told the committee: "When the President and the Congress cannot
agree, to charge ahead is to invite disaster."

Earlier, Miss Fawn Hall, former secretary to Lt Col Oliver North, the man at the
heart of the Iran-Contra affair, who had admitted to shredding, altering and
removing incriminating documents with Col North, yesterday said: "Sometimes you
have to go above the written law."

She then asked if she could retract the remark, make on live television, adding:
"I did not realise the severity of what I was doing.  I wish I could redo it."

Still to appear are Admiral John Poindexer, the former National Security
Adviser, and Lt Col North, who worked for him.  The two are assumed to know
whether or not President Reagan actually knew of the transfer of funds from the
Iranian arms sale profits.

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                              108 of 614 DOCUMENTS

                        Financial Times (London,England)

                            June 10, 1987, Wednesday

Reagan Administration Accused Of Deceiving Congress

BYLINE: David Buchan, Nancy Dunne, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 564 words


The House Chairman of the Iran Contra investigation yesterday, accused the
Reagan Administration of privatising US foreign policy and of deceiving
Congress.

In winding up the first six weeks of Iran-Contra hearings, Mr Lee Hamilton
warned that the resumption of the congressional investigation on June 22 would
focus on the constitutional failures of the Reagan Administration to make itself
accountable to Congress and to conduct an open foreign policy.

The testimony of the glamorous Miss Fawn Hall, former secretary to Lt Col Oliver
North, the man at the heart of the affair, yesterday brought to an end the first
phase of the hearings.  Mr Hamilton described the accounts of 18 witnesses heard
so far as "a depressing story" which had demonstrated "remarkable confusion in
the processes of government."

Miss Hall, who had admitted to shredding, altering and removing incriminating
documents with Col North, yesterday said: "Sometimes you have to go above the
written law."

Quickly, she asked if she could retract the remark, made on live television,
adding that "I did not realise the severity of what I was doing.  I wish I could
redo it."

She, unlike many other witnesses, has been granted complete immunity by the
special prosecutor and congressional committee in return for her co-operation.
Several others have only been granted limited immunity so that their testimony
before on Capitol Hill cannot be used against them in subsequent criminal
proceedings.

Admiral John Poindexter, the former National Security Adviser, and Lt Col North,
who worked for him have still to appear before the committee.  They are assumed
to know whether or not President Reagan actually knew of the transfer of funds
from the Iranian arm sale profits to the Nicaraguan rebels.

Miss Hall had little to add yesterday to her graphic description on Monday of
how she had smuggled documents out of the White House in an effort to "protect
the enterprise." She was not a forthcoming witness, often claimed lapses in
memory and sometimes seemed hostile to questioners.

But she was unequivocal, again, in her praise of her former boss who she said
had asked to resign from the National Security Council when his activities
became public last November.  In the event, he was fired by President Reagan
who, at the same time, described him as "a national hero."

Miss Hall, whose televised testimony was closely watched by the presidential
party attending the economic summit in Venice, did no harm to Mr Reagan's claim
of ignorance about Lt Col North's activities.  She could not recollect an
occasion when the marine colonel had met the President alone.

As for Lt Col North, he was, she said, "every secretary's dream of a boss."

Her defence did not mitigate the damage done to the country, according to the
view of Mr Hamilton.

"Our Government cannot function cloaked in secrecy," he said.  "It cannot
function unless officials tell the truth."

Mr Hamilton quoted the remark by Mr Robert McFarlane, a former National Security
Adviser, who in earlier testimony to the committee commented: "When the
President and the Congress cannot agree, to charge ahead is to invite disaster."

As a result of the congressional decision to cut off aid to the Contra rebels,
some Administration officials solicited other sources of money inside and
outside the US to keep the Contra cause alive.

LANGUAGE: ENGLISH

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                              109 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 12, 1987, Friday

Chaotic Derring-Do Enterpirse That Kept Contras Alive

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 6

LENGTH: 951 words

HIGHLIGHT:
Six weeks of hearings have failed to get to the crucial issues in the Iran arms
scandal, writes Lionel Barber


"Sometimes," declared Ms Fawn Hall, the combative former White House secretary
to Marine Lt Col Oliver North, "you have to go above the written law."

Ms Hall, a 28-year-old part-time model who had earlier admitted to shredding,
altering and removing incriminating documents with Col North, quickly revised
her remark.  But her testimony this week, which ended the first phase of the
televised Iran-Contra hearings, captured the flavour of the previous five weeks.

A succession of witnesses - many defiant and few repentant - have painted a
chaotic picture of how a small group of men were able to run what might be
called an "extra mural foreign policy" in order to arm the Nicaraguan Contra
rebels.  They did this apparently without the knowledge of senior memebers of
the Reagan Administration and well beyond the scrutiny of the US Congress which
had banned US military aid between 1984-86.

The first witness - retired US Air Force Major General Richard V Secord -
portrayed himself as a non-profit making patriot who just wanted to keep the
Contra cause alive.  Six weeks later that testimony looks threadbare: Mr Secord
used some of the profits from secret US government arms sales to Iran to buy a
Porsche and a Piper Seneca aircraft; he has yet to fulfill an earlier pledge to
the committee to turn over his Swiss bank records; and he will almost certainly
be recalled for further questioning.

Mr Secord's position was undermined by testimony by his business partner Mr
Albert Hakim, an Iranian-American with a touch of the Peter Lorre.  An unabashed
profit-making arms dealer, Mr Hakim told Congress that he had made up to Dollars
6 m from the US arms sales to Iran - which it is now clear were blessed by
President Reagan as barter for US hostages held in Lebanon.

The figure of Col North bestrides the drama - even if he has still to be
summoned on stage to give evidence.  Grown men have expressed their deep love
and affection for him.  Mr Rob Owen who served as a financial courier in the
Contra aid network, read out a poetic homage to "Ollie".  Ms Hall more
prosaically, called him "every secretary's dream."

But for all his derring-do and energy, Col North appears a chaotic presence
never quite in control of either his operation (called "the enterprise") or the
men who helped him run it.  The Contra resupply network veered from the
shambolic to the foolhardy: Pilots used car radar to steer their ageing cargo
planes over the Nicaraguan jungle; and Col North himself drew up a plan for the
Contras to seize a Nicaraguan coastal town and defent it "Alamo style" to the
last man.

The Contra resupply network was split by jealousies and rivalry.  Felix
Rodriguez, a fearsome looking Cuban-born CIA officer who wore tinted glasses
before the committee, testified that he ordered armed guards on one of the cargo
planes to stop Gen Secord from stealing the proceeds.  He also accused Mr Secord
and others of making up to 300 per cent profits on weapons sold to the Contras.

What is clear is that the Contra movement was totally reliant on American -
rather than indigenous - support.  When CIA assistance was shut off by Congress
in early 1984, the Contras almost fell apart and were only sustained by some
Dollars 32 m solicited by the US Government and donated by Saudi Arabia.
Perhaps the most stunning revelation to date is how the Saudis single-handedly
kept the Contra cause alive between 1985-86.

In the welter of evidence presented thus far, the Contras themselves have had
little to say.  Mr Adolfo Calero, the civilian head of the Contras' main army,
the FDN, found himself playing bookkeeeper rather than revolutionary in exile.
Yes, he insisted, he had "trunkloads" of documents accounting for every nickel
and dime of American financial aid.

The Contras do not however lack support within the select committees.  A group
of between five and six conservative Republicans, led by the eloquent
Congressman Henry Hyde of Illinois and the terrier-like Senator Orrin Hatch,
have used their allocated time for questions to attack the ambiguous language in
the earlier Congressional ban and to plead skilfully the case for further US
aid.

The crucial issues, notably whether Col North was acting on his own or under
orders, and why his activities went undisclosed for so long are unresolved.  The
committee has had great difficulty in pinning these issues down, largely because
of the linguistic gymnastics employed by key Administration figures such as
President Reagan's former National Security Adviser, Mr Robert McFarlane, and
the current Assistant Secretary of State for Inter-Amercan Affairs Mr Elliott
Abrams.

Significantly, Mr Abrams based much of his defence on that written denial,
saying he had no reason to investigate Col North's activities too closely.
Despite orders from his boss, Mr George Shultz, Secretary of State, to "monitor
Ollie," he asked merely perfunctory questions.  His job is now in jeopardy -
despite Mr Shultz's vows of support - before the Congressional vote in September
on renewal of Contra Aid.

The hearings have yet to expose Presidential wrong-doing, though the flawed
judgements and amateur policy making will have further shaken domestic and
international confidence in the Reagan Administration.

The tales of Iranians being given night tours of the White House situation room,
of private US citizens in wigs acting in the name of the US government have a
comic streak.  But as Senator Daniel Inouye, the Hawaii Democrat and Watergate
Committee veteran who chairs the Senate Iran-Contra committee, said in dignified
tone: "I hope the United States realises this was not funny business.  This was
very tragic business."

LANGUAGE: ENGLISH

GRAPHIC: Picture Fawn Hall admitted shredding papers

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                        Financial Times (London,England)

                             June 12, 1987, Friday

SECTION: SECTION I; American News; Pg. 6

LENGTH: 55 words


Oliver North had a sophisticated electronic security system in his home bought
with money from a Swiss bank account.

The account was controlled by General Secord, Washington Post said.

Former CIA employee Mr Glenn Robinette, who helped buy and install the Dollars
2,000 system, is to appear before the Iran-Contra committee.

LANGUAGE: ENGLISH

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                              111 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 12, 1987, Friday

Reagan Denial

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 31 words


President Ronald Reagan denied he had issued orders authorising secret supplies
to Nicaraguan rebels, saying testimony to the effect by Iran-Contra hearing
witnesses was hearsay.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              112 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 15, 1987, Monday

Contra Memo 'Holds Key'

BYLINE: Lionel Barker, Washington

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 170 words


The senior House of Representatives Democrat on the Iran-Contra committee, Mr
Lee Hamilton, yesterday predicted that there would be calls for impeachment
proceedings against President Reagan, if it was shown that a "smoking gun" memo
written by Col North reached Mr Reagan.

The April 1986 memo outlined the diversion of profits from secret US arms sales
to Iran to the Nicaraguan rebels during a congressional ban on US military aid,
so far the most controversial aspect of the Iran/Contra affair.

President Reagan has denied all knowledge of the funds diversion since it was
disclosed last November 25, following a brief US Justice Department
investigation.  A link between Mr Reagan and the memo has yet to be publicly
established.

Mr Hamilton, a noted moderate from Indiana, said: "I don't have any doubt at all
that that kind of evidence would be exceedingly serious for the President.

"I think it is likely if that occurred - and I emphasis 'if' - you would have a
demand of impeachment proceedings."

LANGUAGE: ENGLISH

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                              113 of 614 DOCUMENTS

                        Financial Times (London,England)

                             June 16, 1987, Tuesday

North Granted Limited Immunity

SECTION: SECTION I; American News; Pg. 6

LENGTH: 44 words


Lt Col Oliver North, the sacked White House aide, was yesterday granted limited
immunity from prosecution by a US Federal judge.  This clears the way for
Congressional investigators to question him later this week about his role in
the Iran/Contra scandal.

LANGUAGE: ENGLISH

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                              114 of 614 DOCUMENTS

                        Financial Times (London,England)

                            June 17, 1987, Wednesday

The Old Reagan Magic Fails As Americans Await The Next Act

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 426 words

HIGHLIGHT:
Lionel Barber in Washington reports on a presidency in decline


For a few brief moments on Monday night, President Reagan departed from his
prepared speech to the nation and read from an old bullfighter's poem.

"The bullfight critics, ranked in rows, fill the enormous plaza full.  But only
one is there who really knows.  And he's the one who fights the bull."

Mr Reagan, stung by press criticism of his stumbling performance at the
inconclusive Venice summit, said the critics in the press and Congress had got
it wrong.  He was there and "the truth is that we came home with everything we
had hoped to accomplish."

Such claims require a suspension of belief, in the light of the tepid final
communique and the tangible waning of US influence over the six other
summiteers.  The rest of Mr Reagan's speech contained similar high-flown claims
which critics of the new political reality in Washington: a President, beset by
scandal and largely stripped of authority facing a Democrat majority in Congress
rushing to fill the vacuum.

Mr Reagan's plea for budget reform included a familiar call for a constitutional
amendment for a balanced budget and a veto on specific spending items.  He
dressed up this proposal as an "economic Bill of Rights" and said he would take
it over the heads of Congress to the American people.

Five years, or even two years ago, Congressmen from Florida to Fort Worth might
have taken note.  Mr Reagan's uncanny ability to tune into ordinary Americans on
a range of issues inspired universal respect.  Today, post Iran-Contra,
Rejykavik and the loss of control of the US Senate to the Democrats, the spell
has been broken.  As one political commentator said this weekend: "There is a
feeling that the country has moved beyond Ronald Reagan."

Earlier this year, when Mr Howard Baker took over as White House chief of staff
there were hopes of a revival.  It was probably asking too much of the respected
former Tennessee Senator.  Indeed his loose managerial style at the White House
- not seeking to intervene in policy debate and "letting Reagan be Reagan" - has
accentuated the feeling of drift.

But any criticism of Mr Baker is largely a criticism of the President he serves.
The lack of coherent statements on the Gulf, the excitement of expectations
before the Venice Summit, indeed the repetitious retrospective nature of the
speech on Monday night, is very much the President's responsibility.  The image
of the bullfighter is not the most apposite: Far more, Mr Reagan resembles the
old bull, wounded and stiff, defying a crowd which is waiting for the next act.

LANGUAGE: ENGLISH

GRAPHIC: Picture Ronald Reagan, stumbling performance

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                              115 of 614 DOCUMENTS

                        Financial Times (London,England)

                            June 17, 1987, Wednesday

'No Smoking Gun' In Contra Scandal

SECTION: SECTION I; American News; Pg. 4

LENGTH: 298 words


President Reagan yesterday denied seeing a memo about plans to divert profits
from US arms sales to Iran to the Nicaraguan Contra rebels.

Mr Reagan was asked about a comment by Congressman Lee Hamilton of Indiana,
chairman of the House select committee investigating the Iran affair, who
predicted calls for impeachment if the President had seen the memo.

Mr Reagan said: "There ain't no smoking gun." Earlier his Chief of Staff, Mr
Howard Baker, said: "The President did not receive that memo and the President
did not know of that memo."

The constant questions about the President's knowledge and role in the
Iran-Contra scandal have put the Administration on the defensive.  The White
House has tried to avoid reacting daily to allegations and disclosures in the
Congressional hearings, but it has proved impossible to ignore the damaging
publicity.

Mr Reagan clearly irritated, played down the impact of the televised
Congressional hearings: "I think, that spotlight has been growing dim these days
...  people are returning to their favourite television programmes."

But transcripts of testimony released by the joint House-Senate committee
yesterday showed that two secretaries employed by Major General Richard Secord,
a key businessman in the scandal, shredded documents and phone logs last
December.

The memo referred to by Mr Hamilton is dated April 1986 and was discovered in
Col Oliver North's files.

Though Mr Reagan has had to retreat on a number of matters relating to the Iran
arms sales and his knowledge of private efforts to support the Contras, he has
stuck to a blanket denial of knowledge of the funds diversion.  This is a key
element in the scandal because the money was used for buying weapons during a
Congressional ban on direct US military aid.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            June 18, 1987, Thursday

North Refuses To Testify Privately Before Congress

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 304 words


Lt Col Oliver North, the star witness in the Iran-Contra affair, has disrupted
the US Congressional investigation by refusing to give private testimony to the
House-Senate committee.

He was due to testify privately today and this would have served to prepare the
committee for his public testimony next month.

Col North's refusal to follow the example of every other Congressional witness
in the affair will make it very difficult for the committee to check his private
evidence against that of the other key witness, Rear Admiral John Poindexter,
former National Security Adviser to President Ronald Reagan.  The admiral met
committee lawyers in private for the second time yesterday.

Senator Daniel Inouye, a Democrat and chairman of the Senate investigation
committee, yesterday described Col North's position as untenable, and said it
exposed him to contempt proceedings.

However, he and the Republican vice chairman, Senator Warren Rudman, said they
would not recommend such steps lest these entailed further delay.

Col North, meanwhile, is fighting a battle in court with the special prosecutor,
Mr Lawrence Walsh, to avoid giving testimony in a criminal inquiry before a
grand jury.

This week, the Congressional investigation drew fire from Mr Reagan, who said it
was full of hearsay evidence and suggested that the US public was bored with it.
But, for the first time, he issued a denial that he knew about a memo from the
colonel outlining a plan to divert to the Nicaraguan Contra rebels funds from US
arms sales to Iran.

Col North, who has insisted since the scandal broke that he wants to tell his
side of the story, has limited immunity from prosecution, which compels him to
testify before Congress.  If he fails to do so, he may face contempt
proceedings.

He is likely to appear in mid-July.

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                        Financial Times (London,England)

                            June 20, 1987, Saturday

North Silence Causes Impasse

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 276 words


The House-Senate committee investigating the Iran-Contra affair yesterday met in
an effort to break the impasse over Lt-Col Oliver North's refusal to testify
behind closed doors.

Col North has also refused to comply with a subpoena requiring him to hand over
crucial documents, thereby disrupting the committee's inquiry and drawing
threats of contempt proceedings from one of the senior Republican members.

All Iran-Contra witnesses have given private testimony to the committee's
lawyers before they have appeared in public.  The procedure - long established -
enables the panel to cross-check testimony and avoid surprises in the public
sessions.

The committee is taking private evidence from President Reagan's former National
Security Adviser, Rear Admiral John Poindexter, previously Col North's
supervisor, and is particularly anxious to compare testimony.

Col North's lawyers argue that the private questioning would violate their
client's rights against self-incrimination, and the Marine officer would appear
only in public session.  Some committee members have suggested, however, that
this is merely stalling and that Col North - despite earlier pledges - does not
want to co-operate.

Col North is under a federal order to testify before the panel but in exchange
has been granted limited immunity from prosecution.

The Washington Post quoting senior committee members as saying that the
committee had concluded that "three previous witnesses - retired Air Force
General Richard Secord, Ms Fawn Hall, Col North's former White House secretary,
and Mr Elliott Abrams, US assistant Secretary of State - had not told the whole
truth.

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                        Financial Times (London,England)

                             June 23, 1987, Tuesday

Iran-Contra Hearings Approach Climax

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 605 words


The Iran-Contra hearings reopen on Capitol Hill today for what promises to be
the decisive final stage in the Congressional investigation of the affair.

Over the next eight weeks, the joint House-Senate Select Committee will hear
evidence from President Ronald Reagan's closest current and former advisers.
Their testimony is considered critical to establishing how much he and other
senior US officials knew about the secret arming of the Nicaraguan Contra
rebels, and whether they engaged in a cover-up.

The mood among committee members has stiffened in recent days, partly as a
result of the legal controversy surrounding future testimony by a key witness,
Lt-Col Oliver North.  But there is also a sense of impending confrontation with
the White House, likely to be provoked by testimony from a former national
security adviser, Rear-Admiral John Poindexter.

One senior committee member told the Washington Post that the admiral's
testimony was expected to be "very explosive." Another noted that three earlier
witnesses - retired Major-Gen Richard Secord, Ms Fawn Hall, Col North former
White House secretary, and Mr Elliot Abrams, a senior State Department official
- had not told the whole truth.

The committee, previously leak-proof, is starting to let out some embarrassing
disclosures.  Yesterday, the Wall Street Journal reported that the State
Department's top lawyer, Mr Abraham Sofaer, had threatened to resign last
November because of misleading Congressional testimony prepared for Mr William
Casey, the CIA director, who has since died, about the Administration's arms
sales to Iran in exchange for US hostages held in Lebanon.

Mr Casey - a linchpin in the Iran affair, whose testimony the committee would
have needed - was also reported to have held a meeting with Col North, at a
private house in Washington, with Contra leaders during a Congressional ban on
any CIA involvement with the rebels.

Col North has been issued with a new subpoena by the committee, ordering him to
hand over by tomorrow documents and diaries related to his role in financing and
arming the Contras and arranging the weapons shipments to Iran.  If he does not
comply, he faces contempt proceedings by Congress, in addition to federal
contempt action over refusal to comply with a grand jury subpoena.

The House-Senate committee is to vote today on a proposal by which Col North
might be persuaded to testify privately and publicly.  He has been refusing the
former, which would be a preparation for his public appearance before the
committee, under limited immunity from prosecution, no earlier than the third
week of July.  Some members, noting the wrangles over this, have doubts about
the colonel's promise to tell his story.

Admiral Poindexter's public testimony is likely to take place in the second week
of July, laying the groundwork for later testimony by Mr George Shultz,
Secretary of State, Mr Caspar Weinberger, Defence Secretary, Mr Donald Regan,
former White House Chief of Staff, and Mr Robert Gates, Mr Casey's deputy at the
CIA.

This week, the hearings will begin with Mr Glenn Robinette, a former CIA
employee who installed an electronic security system at Col North's home in
Virginia, at a cost of Dollars 2,000.  Mr Charles Cooper, Assistant US
Attorney-General, is expected to talk about the preparation of misleading
testimony for Mr Casey, and Mr Stanley Sporkin, former CIA counsel, is likely to
be questioned closely about his former boss.

Mr Michael Ledeen, a National Security Council consultant, who was close to the
Israelis in the Iran arms sales operation, is to appear on Friday.

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                        Financial Times (London,England)

                            June 24, 1987, Wednesday

Congressmen Divided On North Deal

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 44

LENGTH: 440 words


The House and Senate select committees investigating the Iran-Contra scandal
were yesterday split over an outline agreement designed to compel Lt-Col Oliver
North, the former White House aide at the centre of the affair, to testify.

House members balked at an arrangement favoured by leading Senate members which
would have meant giving substantial concessions to Col North in return for his
public testimony early next month.

The tentative agreement struck earlier between leading committee members and Col
North's lawyer, Mr Brendan Sullivan, would have restricted private questioning
of Col North and might have allowed him to testify publicly ahead of his former
boss, Rear Admiral John Poindexter who was President Reagan's national security
adviser.

Some Democrat members of the House Committee are furious about the legal wrangle
over Col North's testimony which they say is being bought at a high price.

Although Col North has been granted limited immunity from prosecution he has
failed to comply with a Congressional subpoena, delayed giving private testimony
for three days, threatened a Congressional agreement about the timing of his
public appearance, and set a precedent for other witnesses subpoenaed by
Congress in other investigations.

"We are being led by the nose," one committee member said.

Because House and Senate members want to finish their public hearings by the end
of the first week of August, they are reluctant to start lengthy contempt
proceedings against Col North for failing to comply with the subpoena.  They
also need Col North's testimony to present the full picture of the scandal to
the American public.

Mr Sullivan's refusal - on behalf of his client - to cooperate with the
committee last week has been described as a legal master stroke, exploiting the
need for Col North's testimony.

Col North, defending his decision last year to invoke his Fifth Amendment right
to silence to avoid self incrimination, said many people had died face down in
the mud to defend individual rights under the US constitution.

A cartoon in the Washington Post has now caught the mood of some members well.
Mr Sullivan, a friendly hand on Col North's shoulder, says: "Remember - a lot
have died face down in the mud so that this man could violate the laws, shred
evidence and tell Congress his conditions for allowing them to see him."

Col North - while pledging to tell his story - has remained silent since
November 25 last year when it was revealed that, under his direction more than
Dollars 10 m (6.3 m Pounds (pds)) profits from secret US arms sales to Iran,
were diverted to Contra rebels.

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                        Financial Times (London,England)

                            June 25, 1987, Thursday

Contra Inquiry Agrees Deal On North Testimony

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 404 words


The Senate and House select committees investigating the Iran/Contra affair last
night struck a deal with the lawyer representing Lt Col Oliver North, a key
witness, to ensure his public testimony early next month.

The deal ends a week-long wrangle between the committees and Col North and
represents substantial concessions to the marine colonel.

The committees have agreed to wait until July 1 for Col North's private
testimony and will restrict their questioning in the closed door sessions simply
to what the President knew about the secret US arms sales to Iran and the
financing of the Nicaraguan Contra rebels.

The committees have also agreed to allow Col North to appear before his one-time
chief, Rear Admiral John Poindexter, President Reagan's former National Security
Adviser, in public session starting July 7 and lasting a week.  This breaks an
agreement between the House-Senate panel and the independent counsel, Mr
Lawrence Walsh, who is leading a criminal inquiry into the affair.  Under this
Col North would not have appeared in public until July 16.

The committees' extraordinary treatment of Col North, which comes on top of a
grant of limited immunity from prosecution, was aimed solely at ensuring his
public appearance.  But several committee members are deeply unhappy about the
concessions.

Under limited immunity, Col North's evidence may not be used against him in a
future criminal case.

Earlier the CIA's former top lawyer told the Iran/Contra hearings that he
recommended President Reagan not to notify Congress of covert arms sales to Iran
because of the potential threat to US hostages in Lebanon.

Mr Stanley Sporkin - now a federal judge in Washington - also said he gave
"stiff legal advice" that President Reagan's approval was needed in late 1985 to
provide legitimacy for actions which the CIA had taken to ship arms to Iran.

Judge Sporkin set out the background to the secret sale of US arms to Iran,
beginning with two anti-tank missiles shipped from Israeli weapons stocks.

He said when he found out that Israel, at the request of the Reagan
Administration, had made two arms shipments to Iran, he intervened vigorously.
He said the only rationale for the arms shipments was to win the release of the
hostages.

Since the Iran-Contra scandal broke, President Reagan has refused to concede
that he viewed the US arms sales to Iran as barter for American hostages.

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                        Financial Times (London,England)

                             June 26, 1987, Friday

North 'Prepared Contra Cover-Up Testimony'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 648 words


Lt Col Oliver North led an attempted cover up of secret US arms sales to Iran by
preparing misleading testimony to Congress, the Iran contra hearings were told
yesterday.

Mr Charles Cooper, Assistant US Attorney General at the US Justice Department,
said Col North prepared the testimony on behalf of Mr William Casey, the now
deceased CIA Director.

Mr Cooper described a White House meeting attended by senior inter-agency
lawyers, Mr Casey, Rear Admiral John Poindester, President Reagan's then
National Security Adviser, in which a chronology of US arms sales to Iran was
prepared.  The meeting took place in late November 1986 amid Congressional
uproar over the covert shipment of arms to Iran.

Mr Cooper said Col North dominated the meeting and suggested that Mr Casey
testify to Congress that "no US Government official" was aware or involved in
the secret arms sales to Iran.  The 1985 sales included TOW anti tank missils
and Hawk anti aircraft missiles.  Under questioning Mr Cooper agreed this simply
was not true.

The joint House Senate committee investigating the scandal heard that the State
Department's top lawyer Mr Abraham Sofaer tnreatened to resign when he heard Mr
Casey's proposed testimony which was subsequently toned down.  However, Mr Casey
deliberately withheld key facts to Congress when he appeared later.

Mr Cooper later took part in a Justice Department enquiry into the arms sale and
he described the dramatic events of the weekend before Mr Edwin Meese US
attorney General disclosed that between Dollars 10 m and Dollars 30 m had been
diverted from the arms sales to Iran to the Nicaraguan Contra rebels.

Over lunch a senior Justice Department lawyer said he had found a memo by Col
North suggesting the diversion scheme.  Mr Cooper said there was no discussion
of calling in the FBI or securing Col North's document despite what he admitted
was a disclosure of tremendous political significance.

Col North was only interviewed by the four member Justice Department team on the
Sunday afternoon.  He had successfully asked for a delay, saying he wanted to go
to church with his children that morning and take them to MacDonalds, "I
remember that stuck in my mind," said Mr Cooper.

At the meeting, Mr Meese showed Col North the key memo in which the marine
Lt-Colonel suggested diverting millions of dollars from US arms sales to Iran to
the Nicaraguan Contra rebels: Col North paused and said with a look of surprise
on his face.  "Is there a cover memorandum?" (The front page of a memo listing
the recipients by name.)

Mr Meese said he was unaware of this and agreed to let Col North look for it.
The Cover memorandum has never been discovered, but is significant since it
could have been sent to President Reagan and other senior US officials.

Under cross-examination, Mr Cooper agreed that US officials led by Col North
misled and failed to inform Mr Edwin Meese, US Attorney General, who was about
to offer legal advice in January 1986 on arms sales to Iran.  He was not, for
example, told that the US Government including the CIA had been involved in
arranging for arms transfers via Israel.

Congressman Bill McCollum, the Florida Republican, reflecting growing
dillusionment among President Reagan's own supporters at the crime, said "it's
certainly one of the highest acts of insubordination and one of the most
treacherous things that's ever occurred to a President, it seems to me, in our
history."

When pressed by congressman Mr Louis Stokes of Ohio, chairman of the House
intelligence committee, Mr Cooper took a long pause, and said based on his
experience of dealing with Col North he would not believe him even if he was
under oath.

The hearings are to resume until a week on Tuesday when Col North will appear
under limited immunity from prosecution for at least five days of which promises
to be dramatic testimony.

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                        Financial Times (London,England)

                            June 27, 1987, Saturday

Ex-CIA Chief Contradicted Tower Verdict

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 303 words


Secret testimony by William Casey, the former CIA director, to the House of
Representatives last autumn about President Reagan's knowledge and approval of
US arms sales to Iran directly contradicts the President's Tower Commission
report.

Mr Casey, who died recently, had told the House Intelligence Committee that
President Reagan was unaware of Israel's August 1985 shipment of US-made Towanti
tank missiles to Iran. He said the US agreed to replenish Israel's weapon
stocks, but only after expressing its displeasure with the sale to the Israeli
Government.

The Tower Commission, appointed by Mr Reagan to investigate the Iran Contra
affair, said it was "most likely that the President approved the Israeli
shipment in advance; it is of paramount importance that the President never
opposed the idea of Israel transferring arms to Iran."

This latest disclosure came yesterday in documents declassified by the Iran
Contra Committees which are holding public hearings into the affair.

The documents confirm earlier testimony this week that Mr Casey, White House
aide Lt-Col Oliver North and President Reagan's national security adviser, Rear
Admiral John Poindexter prepared misleading testimony to Congress last year over
US involvement in the arms sales to Iran.

Whether the President approved the August 1985 shipments is a crucial question
because Mr Reagan did not formally certify the shipment of arms to Iran, as
required by law, until January 1986.  Yet the CIA was involved in the arms
shipments and Col North co-ordinated them as part of an effort to secure the
release of American hostages held in Lebanon.

The Iran Contra hearings are in recess unitl July 7 when Col North will make his
first appearance in public.  He will then break a seven-month silence on this
role in the affair.

LANGUAGE: ENGLISH

GRAPHIC: Picture William Casey

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                        Financial Times (London,England)

                             July 4, 1987, Saturday

Reagan Invokes The Spirit Of Jefferson

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 562 words


President Ronald Reagan yesterday took his campaign to revive his flagging
presidency to Washington's most beautiful monument, the memorial to the man who
drafted the US constitution, Thomas Jefferson.  Mr Reagan declared that, 200
years after the constitution was signed, America still needs an "Economic Bill
of Rights" to protect the freedom of its people.

"It is time to finish the job Jefferson began and to protect our people and
their livelihoods with restrictions on government that will ensure the
fundamental economic freedom of the people, the equivalent of an Economic Bill
of Rights," the President told an audience of political sympathisers.

Mr Reagan's political advisers resorted to the well-tried formula of putting the
President in a setting they hope will reinforce his message.  They sought to
wring the maximum political advantage from a speech which was carefully crafted
to intensify a confrontation with the Democrat-controlled Congress.

With the Democrats on Capital Hill already committed in their budget resolution
to increase taxes in order to reduce the federal budget deficit, Mr Reagan
called for a change in the constitution to require more than as simple majority
in the congress for any increase in taxation.

He reiterated the demand, which has been a well-worn theme particularly in his
second term, that the constitution should also be amended to require a balanced
budget and to strengthen the President's power by permitting him to veto
individual spending proposals in the federal budget.

He called for a "truth in spending" law which would require among other things,
that every increase in federal government spending should be offset by
reductions elsewhere in the budget and be accompanied by a statement of the
effect on private costs, prices, employment and the ability of US companies to
compete internationally.

Mr Reagan's advisers know, because they have tried and failed in the past to get
a balanced budget amendment, that a weakened president cannot hope to get this
legislation through Congress.  But the proposals, and the decision to choose an
ultra-conservative, Justice Robert Bork, as the new nominee to the Supreme
Court, are designed to give Mr Reagan some themes he can employ to draw
attention away from the Iran/Contra affair.

Mr Reagan's political opponents, however, will have little difficulty attacking
many of his positions.  His claim that freedom "is secured more than anything
else by limitiations placed on those in government authority" sounds odd coming
from a President whose Administration is charged with having ignored
congressional laws requiring timely notification of covert operations in the
Iran/Contra affair and several of whose officials are facing criminal
investigations as a result of the scandal.

Senior Administration officials have conceded that Mr Reagan was in large part
re-packaging themes he has put forward before on competitiveness welfare reform,
deregulation and budget reform.

The inconsistencies in the Administration's proposals will also erode their
credibility.  A senior Administration offical briefing reporters yesterday on
the President's speech conceded that the most expensive federal programme
currently envisaged, the Strategic Defence Initiative, would not in the
Administration's view be subject to the "truth in spending" provision.

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                        Financial Times (London,England)

                             July 7, 1987, Tuesday

The Five Star Witness Breaks His Silence And Takes The Stand

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 913 words

HIGHLIGHT:
Lionel Barber reports from Washington on an American patriot with feet of clay


Marine Lt-Col Oliver North, the central character in the Iran Contra scandal,
will break seven months of silence today and tell his version of the affair
which has crippled Ronald Reagan's presidency.

The tall marine with the toothy grin will appear in uniform, bedecked with
ribbons and Vietnam combat medals, at 9 am before the joint House Senate
investigating committee.  No single testimony has been more eagerly awaited
since the public televised hearings opened some nine weeks ago.

Col North has dominated the proceedings from the outset - even though he has
been, as it were, off stage.  Previous witnesses have described how he ran a
"government within a government" with his own mini army, air force, diplomatic
agents, intelligence operatives and fund raisers - all in pursuit of a series of
highly sensitive and sometimes controversial covert operations, most of which
involved secretly arming the Nicaraguan Contra rebels during a congressional ban
on US military aid.

His power within the Reagan Administration was such that he was known as "The
Five Star Marine Lieutenant Colonel."

The all-embracing question facing the Iran Contra panel is how this 43-year-old
born again Christian, whose medical records reveal evidence of mental
instability, was allowed to wield such influence within the executive.  On whose
authority, if any, was he acting?

Only Col North can answer this question, which goes to the heart of the Iran
Contra affair.  Was he merely a gung-ho cowboy acting on the authority of the
President?  Was he the secret surrogate of the now deceased director of the
Central Intelligence Agency, Mr William Casey?  Or was he merely a magnetic
personality who took advantage of the slack leadership of the President and
exploited the in-fighting among the President's advisers to form his own secret
foreign policy agenda - which proved so close the President's own wishes that no
one dared challenge him?

The answer will provide clues to other subsidiary questions, such as who devised
the plan to use secret US arms sales to Iran, first to secure the release of
American hostages held in Lebanon and second to use the profits to arm the
Contra rebels in 1985 and 1986.

Of course, Col North's testimony is far from the last word.  In many respects
the next witness - Rear Admiral John Poindexter, his one-time boss and President
Reagan's former national security adviser - could be even more important because
he had direct access to the President and can contradict Mr Reagan's one
enduring denial: the he new nothing of the diversion scheme.

But Col North supplies continuity to the affair.  He moved into the White House
as a middle-ranking National Security Council staff aide in 1981 and soon became
a pivotal figure in the Administration's policy on international terrorism and
as a specialist in crisis management.

Over the next five years, Col North was to help co-ordinate some spectacular
covert operations: the 1983 invasion of Grenada, the mining of the Nicaraguan
harbours in that same year, the interception of the Egyptian airliner carrying
the terrorists involved in the Achille Lauro cruise liner in 1985, and last
year's US bombing raid on Libya.

In a sympathetic profile of Col North in this month's Washington magazine, the
authors suggest that much of the marine's motivation lay in his desire to
restore American pride after the humiliation of Vietnam (where he was wounded
and decorated).  When the American citizens were taken hostage by terrorists in
Lebanon, Col North wanted to get them back home just as much as President Reagan
himself and he worked furiously to that end.

This image - which caused Mr Reagan to describe Col North as a national hero
when the scandal broke last November - will be heavily touted in testimony this
week. But there is another side to Col North's character, an impatience with
institutions and conventions in government which at best show him to be naive,
at worst (in the eyes of his numerous critics in Congress) a threat to a
democratic society where checks and balances rule.

Under a grant of limited immunity, Col North will have to explain not only how
he came to be a quasi secretary of state, but also answer specific allegations
about his conduct which could lead to criminal charges against him.

According to earlier testimony Col North benefited personally from some of the
Iran arms sales profits.  He tried to conceal the origin of a Dollars 14,000
home security system paid for by a colleague.  His Iranian-American associate,
the arms dealer Mr Albert Hakim, made him the beneficiary of a Dollars 2 m will
and a Dollars 200,000 life insurance policy.  The patriot, so it appears, has
clay feet.

Equally damaging is Col North's role in the Contra fund-raising scheme which
involved defrauding the Internal Revenue Service.  Two of Col North's associates
have already pleaded guilty to conspiracy in the tax fraud scheme.  Finally,
there is evidence of a cover-up in the eight days before November 25, when key
documents were shredded by Col North and his White House secretary Miss Fawn
Hall.  His actions in those last frantic hours before he was sacked by President
Reagan could lead to charges of obstruction of justice.

Criminal charges, however, are the realm of the special prosecutor investigating
the affair.  The main focus this week will be on the marine who will tell a
story which, in President Reagan's own words, would make "a great movie."

LANGUAGE: ENGLISH

GRAPHIC: Picture North, no single testimony has been more eagerly awaited since
the hearing opened

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                        Financial Times (London,England)

                             July 7, 1987, Tuesday

Prices Finish Slightly Ahead In New York

BYLINE: Roderick Oram, New York

SECTION: SECTION I; International Capital Markets & Companies; Pg. 31

LENGTH: 209 words


US bond prices followed the ebb and flow of the dollar yesterday in quiet
post-holiday trading.  After opening about two-thirds of a point ahead, they
eased as the currency lost a little ground. The benchmark 8.75 per cent Treasury
long bond finished up 3/16 of a point at 103 9/16 yielding 8.42 per cent.

In the Treasury's weekly auction the average discount yield on three-month
Treasury bills dipped to 5.62 per cent from 5.82 per cent a week earlier and on
six-month bills to 5.68 per cent from 6 per cent.

The dollar's strength in recent weeks has left analysts wondering if the Federal
Reserve Board might loosen its monetary policy at today's meeting of its open
market committee.

The outcome of the meeting will not be known for some time.  Some analysts
argue, however, that the committee is unlikely to take any action because the
meeting is the last to be chaired by Mr Paul Volcker who is stepping down
shortly.

Washington could keep the markets' attention for other reasons this week given
the shortage of economic news.  In particular hearings will resume on the trade
bill and the Iran-Contra affair and will start soon on the nominations of Mr
Alan Greenspan to the Fed chairmanship and Mr Robert Bork to the Supreme Court.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            July 8, 1987, Wednesday

North Pledges To Tell Inquiry 'The Good, Bad And The Ugly'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 520 words


As Marine Lt-Col Oliver North rose to take the oath yesterday, the cameras
clicked in the Senate caucus room like a hundred cicadas.  A slightly built man,
Col North had none of the physical presence of someone who has been described as
the central character in America's worst political scandal since Watergate, but
his testimony was riveting.

In three hours of often barbed exchanges with his interrogators on the house
Senate select committee investigating the Iran Contra affair, Col North
described how he shredded hundreds of vital documents relating to the affair and
how he participated in a cover-up involving some of President Reagan's most
senior officials.

But Col North refused to play the fall guy.  "I was not the lone wolf creating
paper," he almost shouted before the committee and the TV cameras broadcasting
yesterday's proceedings live.  "I sought approval for every one of my actions."

Col North did indeed generate a great deal of paper during his five years as a
middle ranking official on the National Security Council staff at the White
House between 1981 and 1986.  Throughout that time he was involved in some of
the Reagan Administration's most sensitive covert operations: efforts to free
American hostages in Lebanon, anti-terrorism, and most controversial of all, the
secret army of Nicaraguan Contra rebels using funds generated by secret US arms
sales to Iran.

Yesterday his lawyer, Mr Brendan V Sullivan, complained that he had had
insufficient time to examine the hundreds of different documents written by Col
North and in the first of a series of clashes with the committee chairman and
Watergate veteran, Senator Daniel Inouye, he said the documents amounted to five
boxes the height of Col North.

Earlier he asked if Col North could read out a brief statement to the committee.
Senator Inouye said such a statement should have been delivered to the committee
48 hours in advance: "Here once again the Colonel is asking us to bend the law
and to suggest that he may be above the law."

Over the next three hours the Senate caucus room often turned into something
akin to a New York criminal courthouse with Mr Sullivan interjecting with a
quickfire "objection" as Mr John Neilds tried to establish whether Col North was
acting with the knowledge and authority of President Reagan.  For the first time
in nine weeks of hearings, Senator Inouye had to use his gavel.

Col North was anxious to clear his name and to destroy what he described as the
myths surrounding his role at the NSC.  "People used to walk up to me and tell
me what a great job I was doing," he said in a flash of emotion.

It was not true, he said, that he was a loose cannon on the deck of state
working out of the basement in the White House.  "It must have been the only
third-floor basement in Washington."

What emerged was a portrait of a true believer, a man who believed that he was
serving his President and his country in the fight against Communism.  Only the
next three days, however, will reveal whether Col North sticks to his pledge to
tell the truth, "the good, the bad and the ugly."

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            July 8, 1987, Wednesday

Col North Testifies He Acted Under Orders In Iran-Contra Cover-Up

BYLINE: Stewart Fleming, Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 767 words


Marine Lt Col Oliver North, the former White House aide at the centre of the
Iran-Contra scandal, yesterday told Congress he had acted under orders during a
cover-up of his activities last year.

Col North implicated several former senior government officials, including Mr
William Casey, the now deceased Central Intelligence Agency director, in the
shredding of hundreds of key documents.

He also suggested that Mr Edwin Meese, US Attorney-General took part in
preparing misleading testimony to Congress and to the American people about
secret US arms sales to Iran.

During six hours of often impassioned testimony, Col North said he never told
President Reagan of the diversion of profits from the Iran arms sales to the
Nicaraguan Contra rebels during a Congressional ban on US military aid, but he
assumed Mr Reagan knew about it.

Col North is the first Administration witness intimately involved in organising
the covert operations to testify before the joint House-Senate committee
investigating the affair, which has crippled the Reagan presidency and damaged
its standing among its allies at home and abroad.

His testimony yesterday points the finger of blame to more senior US officials,
some of whom, such as Mr Meese, are to be called before the panel later this
month.

Combative and self assured, at times arrogant and flippant, the 43-year-old
marine bridled at suggestions that as a junior officer at the White House
National Security Council, he was a "loose cannon" or a "lone wolf" who in
November 1986 had on his own authority prepared a false chronology of the arms
deals to protect the President from political damage as the scandal surfaced.

"By putting out this false version of the facts you were committing, were you
not, the entire administration to telling a false story," charged Mr John
Nields, the cross examining legal counsel for the committee as the two men
sparred over Col North's role.

"Well," retorted the uniformed marine, the medals for bravery in combat pinned
to his chest, "I'm not trying to pass the buck here.  Okay?  I did a lot of
things and I want to stand up and say that I am proud of them." But he went on,
"I don't want you to think, counsel, that I went about this all on my own ...
there were many people to include: the former Assistant to the President for
National Security Affairs, the current National Security Adviser, the Attorney
General of the United States of America, the Director of the Central
Intelligence Agency.  All of them knew that to be wrong."

Col North said: "I have never in 23 years of military service violated an order.
I have never carried out a single act in which I did not have authority from my
superiors."

He said he kept Rear-Admiral John Poindexter, his former boss and President
Reagan's former national security adviser, informed regularly of his activities
in support of the Contra rebels and the Iran initiative.

He also flatly contradicted earlier sworn testimony to the committee from Mr
Robert McFarlane, his White House boss between 1983 and 1985, who said he had
specifically told Col North not to help raise money for the Contras during the
Congressional aid ban.

Col North also made frequent references to his contacts with Mr Casey.  Last
October when news leaked of secret US arms sales to Iran in exchange for
American hostages in Lebanon, Col North said Mr Casey and he had agreed there
was a need to "clean up." He subsequently shredded hunderds of documents
relating to his activities.

Among the shredded documents may have been five memoranda from Col North to Mr
Poindexter outlining the diversion scheme, Col North agreed under close
questioning.  He said he had prepared the memos to go "up the line" for
presidential approval.

But Col North said he did not know if they reached the President.  On November
25 last year, after the diversion of more than Dollars 10 m (6.2 m Pounds (pds))
to the Contras was made public, Col North was fired.  That same day, the
President telephoned him and said: "I just did not know."

Mr Reagan's one enduring denial is that he knew nothing of the diversion of
profits.

The significance of the testimony by North, a man President Reagan once referred
to as "a national hero" has been underscored by the manoeuvring behind the
scenes ahead of his appearance before the congressional investigating
committees, and a nationwide television audience.  The committees have granted
him limited immunity from prosecution for his testimony and the Reagan
administration is perceived to have been trying to erode his credibility as a
witness.

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                        Financial Times (London,England)

                             July 9, 1987, Thursday

North Admits He Lied To Congress On Contra Arms

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 633 words


Lt-Col Oliver North, the sacked White House aide, yesterday admitted he had lied
to Congress about his role in secretly arming the Nicaraguan Contra rebels in
defiance of a Congressinal ban on US military aid.

Col North said he had prepared documents which were "erroneous, misleading and
evasive" last year when Congressional committees began to inquire about his role
in supplying the contras with money and weapons.

The admission came at the end of the second day of often melodramatic but
damaging testimony in which Col North portrayed himself as a secret surrogate of
the now deceased CIA director Mr William Casey, fighting Communism and terrorism
through a string of covert operations funded by secret US arms sales to Iran.

Col North also continued to implicate senior US government officials with
knowledge of his covert operations, particularly in Nicaragua.  He said Mr
George Shultz, US Secretary of State, congratulated him for his contra support
efforts and that Mr Elliott Abrams, Assistant Secretary of State for Latin
American Affairs, contrary to his earlier testimony, knew about them.

"I was supposed to drop like a hot rock when it all came down," said Col North,
but he refused to play the complete fall guy.

The 43-year-old Marine and Vietnam War veteran also described how he and Israeli
Government representatives first devised the scheme which lies at the heart of
the Iran-Contra scandal: the diversion of around Dollars 12 m (7.4 m Pounds
(pds) at current rates) in profits from the Iran arms sales to the Contras,
during the congressional ban.

Col North said in Februry last year he met an Israeli government official and an
Iranian arms dealer, Mr Manucher Ghorbanifar, whom he and the CIA suspected of
being an Israeli agent.  The meeting took place in Europe shortly after Israel,
with the approval of President Reagan, shipped anti-tank and anti-aircraft
missiles to Iran in exchange for American hostages held in Lebanon.

Col North said he was worried about selling arms to Iran which sponsored
terrorism, and Mr Ghorbanifar had tried to make the idea more palatable.  During
a brief converstation in a public toilet, Mr Ghorbanifar suggested using the
surplus profits to arm the contras.  "I thought that using the Ayatollah's money
to support the democratic resistance in Nicaragua was a right good idea," Col
North told the committee, saying he subsequently won the approval of his then
boss Rear Admiral John Poindexter, President Reagan's former National Security
Adviser, and Mr Casey, who described it as "the ultimate irony, the ultimate
covert operation."

The late Mr Casey's name was to appear regularly throughout yesterday's
testimony, supervising and directing his activities and at times appearing
almost as a father figure.

It was Mr Casey who gave Col North a ledger in which he could keep a list of
donors and recipients in the Contra aid programme.  He later ordered Col North
to shred the ledger - which the marine duly did.

At times, Col North appeared a natural television performer, highly articulate,
mixing emotion and melodrama.  Asked why he had accepted as a personal gift a
Dollars 14,000 security system at his Virginia home, Col North said he had been
informed by the FBI that "the world's most dangerous terrorist," Abu Nidal had
targeted him for assassination.

When the US Government could not provide security, he sought help from his
associate, retired Major General Richard Secord.

Under questioning he agreed he had attempted to conceal the gift and admitted it
was the biggest mistake of his life.  He also admitted that contrary to the
Contras operation, he kept no accounts of the Iran arms deals and was surprised
to hear that some Dollars 8 m remained in the Swiss bank account of General
Secord.

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                             July 9, 1987, Thursday

North Draws Praise And Scorn Over Testimony

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 481 words

HIGHLIGHT:
Stewart Fleming in Washington on mixed reactions to the Iran inquiry's star
witness


Lt-Col Oliver North in his televised testimony before the Congressional inquiry
into the Iran Contra affair had just finished explaining that "Joshua" and
"Samuel" had approved what Col North believed to be a legal method for sending
arms shipments to Iran via Israel.

"Joshua," Col North explained, was the code name for President Ronald Reagan.
"Samuel" was the name for Mr Caspar Weinberger the Defence Secretary, who had
been trying to block the deal in late 1985.  The codes were necessary, he
pointed out, because "bananas" and "oranges," Israel and the US, were organising
the operation on open telephone lines.

Suddenly on the television screen "Joshua" appeared, waving to well-wishers as
he headed off to make a diversionary speech about budget policy in Connecticut.
The television networks had abandoned their morning soap operas to carry Col
North's testimony live.  But still desperate for something other than the
picture of a sedentary marine to put on the screen, they decided that it would
not be inappropriate to carry silent pictures of Mr Reagan climbing into his
helicopter at the White House and a voice-over of Col North's commentary on the
Irangate scandal.

The White House has struggled mightily to divert attention from Col North, but
at least for the first two days it has failed.  It is an open question how long
a shelf-life as a media star Col North will have, absorbing though the variety
of roles he plays are.

Lt-Col North's performance has stirred up mixed emotions and some confusion.

Those who expected him to play the loyal marine and take the blame have been
disappointed.  "Assumed the President knew," said the front page headline in US
Today.  "Assumed Reagan ok'd diversion," said the conservative Washington Times.

"Colonel North ...  is a supporting actor," said the Baltimore Sun.  In the
conservative press there was less readiness to defend the President than to
attack the Congress.

"If Congress wants less amateurism in covert operations may be it shouldn't
write the CIA out of the game," said the Wall Street Journal.  The right
question, said the Washington Times, is "whether America's foreign policy
priority should be to make Congress feel important or to defend democracy."

Among the general public, Col North has been described as everything from "a
great American hero" who is "a victim of the chain of command" and a witch hunt
by the committee, to a "Rambo" who should not have been charged.

One thing seems assured, however.  By pointing to the decision-makers higher up
the White House chain of command and not falling on his sword, Col North has
ensured that the forthcoming appearances of men like former national security
adviser John Poindexter, Attorney General Edwin Meese and other top officials in
the next three weeks will also attract plenty of attention.  That is bad news
for Mr Reagan.

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                        Financial Times (London,England)

                             July 10, 1987, Friday

How North's Private War Grew Out Of The Public Shame Of Vietnam

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 630 words

HIGHLIGHT:
Lionel Barber profiles 'Mr Goode,' campaigner against communism


In two days of testimony to the joint Congressional enquiry into the Iran-Contra
scandal, Marine Lt Col Oliver North has presented a vivid portrait of the
alienation of the American soldier in modern US society.

This alienation goes beyond the Vietnam shock syndrome suffered by so many
veterans (including North himself) returning home in defeat.  It runs deep into
the psyche of a man prepared to pay any price, bear any burden to fight the
Communist threat, but who could not find a lawful place in the open, democratic
society of the US today.

So he went under cover.  As a middle-ranking White House aide Col North found
his niche in the covert operation.  Some of these para-military peacetime
operations, like the mid-air interception and capture of the Achille Lauro
hijackers, were extraordinarily successful.

All took place in a demi world: the late night pay drops for Nicaraguan Contra
leaders outside the White House; the bizarre code names such as "Joshua" (better
known as Ronald Reagan) and the most revealing of them all, "Mr Goode" (better
known as Marine Lt Col Oliver Lawrence North).

Col North lives in a Manichean world where evil is easily traced and Moscow's
threat to the US is pervasive: from communication intercepts from Cuba to Soviet
surrogates in Africa, Asia and above all Central America, where the Sandinista
Government in Nicaragua is a direct and very close threat to the US.  "We live
in a dangerous world," is the marine's favourite preamble.

He can reel off the name of every Marxist insurgency movement in the world
without a pause.  He was prepared to travel millions of miles, work incessant
hours and even die for his country.  Yet, as he so poignantly testified, when he
was targeted for assissination by the Arab terrorist Abu Nidal the US Government
would not even provide a bodyguard.  Still Col North fought on.

Many Americans (and many others abroad) would back the Contra rebel cause, too.
But Col North was not willing to run the risk of losing in a public debate.

Having suffered the trauma of Vietnam, when first the US media then Congress
turned against the war and left fighters like Col North in the paddy-fields, he
determined to lead the struggle himself.  "We won a lot of battles in Vietnam,"
he told the joint Senate inquiry, "but we lost the war."

Mr William Casey, the World War Two spymaster and now deceased director of the
CIA, took the same view.  Having seen how Congressional oversight laws
(introduced post-Vietnam and Watergate) had hamstrung the CIA's covert
activities, he chose Col North as his surrogate.  The marine, adopting the CIA
director as a father figure, finally round his role.  "He was the best read man
I have ever met," said Col North this week.  "He could read a whole book on a
plane."

There is a boyish naivete about Col North which makes a nonsense of earlier
White House propaganda that he was running a rogue operation in Government which
no one else knew about.  His naivete comes across most easily in his humour - "I
was Mr Goode, I was very good," or "I guess I must have shredded my memory," but
he bares his soul before the television cameras as only an American can.

When he admitted to "the grossest judgment of my life" - accepting and later
concealing the gift of a home security system worth Dollars 14,000 - Col North
was trying to play a modern St Sebastian.

Col North may be the best rehearsed Congressional witness to appear on Capitol
Hill since John Dean in the Watergate hearing.  His natural television
personality, communicated in a melodramatic tone, have already turned him into a
box office hit.  But strip away the verbiage and look into those deep sunken
eyes and you will see a true believer who is still waging his very own private
war.

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                             July 10, 1987, Friday

BYLINE: Stewart Fleming

SECTION: SECTION I; American News; Pg. 4

LENGTH: 504 words

HIGHLIGHT:
Stewart Fleming looks at the colonel's fighting legal counsel


In the judgment of the Sen Sam Nunn, one of the members of the congressional
committee into the Iran/Contra affair, he is "one of the best criminal lawyers
around."

The man he is talking about is the slightly built, owlish-looking counsel to Lt
Col Oliver North, Mr Brendan Sullivan.

Even before Col North's testimony began the tenacious Mr Sullivan had bruised
the Congress's pride, forcing the committee to accept many of the conditions he
was insisting upon in return for Col North's public testimony.

Within hours of the opening of the public hearing the 45-year-old Mr Sullivan
had also left an indelible mark on a national television audience.

The star witness had not had a chance to answer the committee's first question
before Mr Sullivan had displayed his celebrated determination to fight tooth and
nail in his client's cause - not least by trying to arouse public sympathy for a
man whose honesty and partriotism has been under a calculated attack from his
enemies as his public testimony approached.

Voluminuous records which had been delivered at the last minute to him had been
deliberately "shuffled by date and subject matter ... so that one could not
begin to understand what those records said," Mr Sullivan charged.

In the hours of interrogation that followed one of the enduring images has been
the sight of the slightly built Mr Sullivan whispering into Col North's ear, one
fatherly arm around the, at times, impetuous marine, the other stretched out so
that his hand could cover the microphone before them.

Those who knew Mr Sullivan and his law firm, Williams and Connolly, expected no
less, however.  Mr Edward Bennett Williams, until a few years ago one of the
partners in Washington's chicest sports franchise, the Redskins football team,
and owner today of the currently somewhat bedraggled Baltimore Orioles baseball
team, is a Washington insider to his fingertips.

But his law firm has a reputation for being ready to take on the Federal
Government.  Mr Sullivan made his reputation doing exactly that.  In 1969, at
the height of the Vietnam war protests, two of 24 US soldiers charged by the
army with mutiny at a California military stockade as a result of a sit-down
strike, asked Mr Sullivan, who was not an army legal officer, to defend them.

According to the New York Times his aggressive prosecution of the case so
angered the army top brass he was ordered to spend the last six months of his
service in Vietnam, a transfer that was eventually blocked.

Some question whether Mr Sullivan's aggressive approach to the Congress has been
the best one.  Others are predicting that the biggest confrontation between him
and the committee has yet to come.  The stage for that has already been set.

Mr Sullivan has already charged the committee with "stalling" so as to be able
to recall Col North next week after having had a weekend to analyse his
testimony.  The informal understanding between him and the committee was that
Col North's testimony would end tomorrow.

LANGUAGE: ENGLISH

GRAPHIC: Picture Oliver North, left, and Brendan Sullivan

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                        Financial Times (London,England)

                             July 10, 1987, Friday

North Shredded Documents With Investigators Present

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 668 words


Lt Col Oliver North described yesterday how he shredded dozens of politically
embarrassing documents, in the presence of a three-man US Justice Department
team, sent to the White House last year to investigate his activities.

The shredding took place a couple of hours after one of the investigators
discovered the "smoking gun" memo by Col North seeking President Reagan's
approval for the diversion of millions of dollars from secret US arms sales to
Iran to the Nicaraguan Contra rebels during a Congressional ban on US military
aid.

Col North's disclosure is certain to damage Mr Ed Meese, the US Attorney
General, who was asked by President Reagan to conduct a "fact finding" inquiry
last November into the arms sales to Iran.

Mr Meese has already come under Congressional fire for a slipshod inquiry which
allowed hundreds of documents to be shredded, failed to seal Col North's office,
and failed to use criminal investigators.  Mr Meese's defence - which now looks
threadbare - has been that he had no grounds to suspect criminal activity.

Col North said of the Justice Department team: "They sat in my office and I
walked right out to the shredder, which was outside the door, and I shredded
documents."

To laughter Col North said: "They were working on their projects and I was
working on mine."

In his third day of testimony to the Iran Contra committee, Col North also
described how the late Mr William Casey, director of the CIA, designated him as
a fall guy in the event that the diversion scheme became public knowledge.

To a hushed Senate causus room, Col North said Mr Casey had told him in October
that he would have to leave his job at the National Security Council staff in
the White House.  "He suggested that it was probably necessary to go further up
the line."

He suggested that it (the scapegoat) might be Admiral Poindexter, President
Reagan's former National Security Adviser.

Col North's testimony yesterday pushed Mr Casey further centre-stage, and
underlined that he, as a middle ranking official, was not running rogue
operations in the Reagan Administration.  However, in spite of deft cross
examination by the Chief Senate Counsel, Mr Arthur Liman, Col North did not
implicate Mr Reagan in the diversion scheme or imply that the President had a
specific knowledge of his covert operation in support of the Contras.  However
he agreed with Mr Liman's characterisation of his role as the link of plausible
deniability.

Col North has become a box office hit during the live broadcast hearings into
the Iran affair, America's worst political scandal since Watergate.  Yesterday
the White House switched tack and admitted that President Reagan had watched "a
good deal" of the Marine's testimony.

As yesterday's hearings began, Col North vigorously defended his role in the
Iran-Contra affair and sought to blame Congress for the scandal.  The marine
said he would walk out of the hearings with his head held high and that he was
proud of his five years at the White House running convert operations around the
world.

Turning to his controversial and probably illegal role in secretly arming
Nicaraguan Contra rebels between 1984 and 1968, Col North said it would never
have been necessary if Congress had not cut off funds over that period.

The 43-year-old Vietnam war veteran, who was accompanied for the first time by
his wife Betsy, said there were clear parallels between US withdrawal from
Vietnam and the precarious US commitment to the rebels fighting the communist
regime in Nicaragua.

In an evident attempt to gain public sympathy for his cause at the live
broadcast hearings, Col North cast doubts on their fairness.

"You," he declared jabbing a finger at the assembled 26 House and Senate members
of the Committee, "will not investigate yourselves.  It's like a baseball game
in which you see the players and the umpire."

He also called into question the value of the hearings, declaring that they had
damaged US standing internationally.

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                        Financial Times (London,England)

                            July 11, 1987, Saturday

North Popularity Puts Congress On The Defensive

BYLINE: Stewart Fleming, Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 725 words


A groundswell of public support and sympathy for Lt Col Oliver North as a result
of his virtuoso performance in the televised hearings into the Iran/Contra
affair has put the Congressional committee investigating the affair on the
defensive.

At the same time the White House moved swiftly to try to capitalise on the
positive elements of Col North's popularity, which could help the embattled
President Ronald Reagan, particularly in his efforts to rally support for the
Contra rebels in Nicaragua.

Col North has been at his most passionate and eloquent on Capitol Hill in
defending administration support for the Contras seeking to overthrow the
Sandinista Government.

"The Administration is pleased that much of the story on our support for the
Contras and the freedom fighters in Central America is being protrayed by Col
North to audiences that are appreciative and understanding," said Mr Marlin
Fitzwater, the White House spokesman, who earlier this week claimed that the
President was not interested in watching the hearings.

Several other aspects of Col North's testimony will be much less welcome to the
Reagan Administration and could lead to much tougher questioning for some
current and former top officials who will be giving their version of events to
Congressional investigators in the next three weeks.

Some investigative committee members will be even more determined now to try to
recover the political initiative.

Yesterday, however, it was the difficulties which Col North had created for his
inquiries which were in evidence as rumbling divisions among the investigators
surfaced in public recriminations and testy confrontations in full view of the
cameras.

Senator David Boren, for example, complained that it had been a mistake to allow
legal counsel to question Col North, a task he claimed should have been left to
elected politicians.

The upsurge of support for Col North was all too clear on Capitol Hill
yesterday.  The colonel and his media-conscious lawyer, Mr Brendan Sullivan, had
placed on the desk in front of them a pile of congratulatory telegrammes over a
foot high.

One cable from a former marine, said: "You are a real man amongst a sea of 'mere
males'." Another said: "I congratulate you on your decorum in the face of those
ill-bred hyenas putting you through this hell."

Some well-wishers said they would support Col North if he ran for President.
Others said he made them proud to be Americans.  One newspaper proclaimed
Olliemania Sweeps The USA.

With the White House and individual Congressmen reporting overwhleming backing
for him in public telephone calls to their offices, Col North denied to the
inquiry that he had political ambitions.

Under cross-examination from the New York trial lawyer and Senate chief counsel,
Mr Arthur Linan, Col North described what many believe is the essence of the
Irangate scandal: the establishment of a covert foreign policy apparatus,
independent of Congress, and allowed to operate on a self-financing basis.  Col
North described how the concept was devised by William Casey, the CIA director,
who has since died.

"It was to be a self-financing operation independent of appropriate money
capable of conducting covert action and other countries might be the
beneficiaries."

Col North's virtuoso performance in front of cameras at the live broadcast
hearings has distracted attention from the fundamental concept, and he has won
acclaim as a man who is prepared to be the "fall guy."

The wave of support for Col North, who has presented himself as a loyal and
patriotic officer believing he was carrying out the wishes of his superiors and
his President has created further problems for several current and former top
administration officials.

Mr George Shultz, the Secretary of State, through his spokesman has denied Col
North's claim that he knew more about details of the financial and military
support Col North organised for the Contra rebels than he has admitted.

The Justice Department restated Col North's testimony that he shredded sensitive
documents in November under the very noses of Justice Department investigators.
Col North's claim reinforces charges that Mr Edwin Meese, the Attorney-General
and a close associate of the President, did not conduct his investigation into
the sale of arms to Iran in a thorough way.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             July 13, 1987, Monday

White House Fears Further Iran-Contra Disclosures

BYLINE: Stewart Fleming, Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 36

LENGTH: 485 words


The US Congressional hearings into the Iran-Contra scandal resume today with the
White House worried that fresh revelations from key witnesses could further
damage President Ronald Reagan, and the investigators anxious to regain the
initiative lost last week by the spellbinding testimony of Lt Col Oliver North.

Lt Col North has succeeded in shifting responsibility on to his superiors, in
particular Rear Admiral John Poindexter, President Reagan's former National
Security Adviser, who will take the witness stand possibly tomorrow and who had
the closest day-to-day contact with the President while the covert operations
were being planned.

Rear Admiral Poindexter was forced to resign last November when it emerged that
millions of dollars of profits from the secret US arms sales to Iran had been
used to arm the Contra rebels in Nicaragua during a congressional ban on
military aid.  He is seen to be the top official best placed to support or
contradict the President's assertion that he knew nothing of the allegedly
illegal diversion.

Lt Col North's story about how he was the designated "fall guy" for the
Administration aroused enormous public sympathy, but polls suggest this sympathy
does not extend to support for either the Nicaraguan Contra aid policy, or to Mr
Reagan himself.

A New York Times/CBS poll taken last Thursday showed that most Americans still
believe the President is lying about his ignorance of the affair, and that Lt
Col North was acting under orders from above.

The poll also suggests there is a difference between the public's emotive
support for Lt Col North and judgments about what he did.  The public also
continues to back the hearings themselves, which, to President Reagan's
annoyance are attracting huge television audiences.

Today the 26-strong joint House-Senate panel will try to refocus public
attention on the issues raised by Lt Col North's revelations.

Lt Col North disclosed that the late Mr William Casey, Central Intelligence
Agency head, authorised the creation of a slush fund.  Generated from the Iran
arms deal profits, it was to be used for covert operations around the world
without the knowledge of Congress, and without asking Congress for funds as
required under the constitution.

Senator William Cohen, the Maine Republican, described this disclosure as by far
the most important and disturbing, since the live broadcast hearings began 10
weeks ago.

Senator Daniel Inouye, the Hawaii Democrat and Watergate committee veteran who
chairs the Senate side of the investigation, said Lt Col North's activities
appeared to undermine the principles of democracy.  But he said: "I have not
seen anything so far as I am concerned that would be sufficient grounds to
impeach the President of the United States."

Committee members are outraged by Lt Col North's confession that he deliberately
lied to Congress about his activities.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             July 14, 1987, Tuesday

White House Denies Reagan Briefed On Covert Arms Profits

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 439 words


The White House yesterday firmly rejected suggestions that President Ronald
Reagan had been briefed last year on plans to use profits from sales of arms to
Iran for covert operations.  This followed comments by Senator Daniel Inouye,
co-chairman of the Congressional committee investigating the Iran-Contra arms
scandal.

The senator had said at the weekend that investigations had a vitally important
document in which Vice-Adm John Poindexter, former National Security Adviser to
Mr Reagan, said "the president agrees" to divert profits from the arms sales to
finance cover activities.

Mr Inouye's comments gave rise yesterday to a sharp exchange between him and two
Republican members of the committee.  They charged that, contrary to the
impression created by the newspaper reports of Mr Inouye's remarks, a memorandum
that went to the President, and to which the Senator had referred, did not
indicate that profits were used for covert operations.

"I would suggest that the President could have read it from cover to cover and
not have had any knowledge of an alleged diversion," said Representative Richard
Cheney.

When Lt-Col Oliver North, former White House aide, went into his fifth day of
testimony on the Iran-Contra affair in Washington yesterday, he found his
political convictions, and his capacity to manage the extensive covert
operations within his control, coming under fire.

After four days of listening to Col North use the hearings as a stage from which
to propound and justify his political philosophy, Sen George Mitchell of Maine
told Col North that there is "another point of view."

The hearings' investigations of Col North are more or less over and attention is
switching towards the testimony later this week of Rear Admiral John Poindexter,
President Reagan's former National Security Adviser.

Col North yesterday found his ideological commitment to the Contras being
criticised.  With public opinion polls suggesting that Col North's covert
operations are less attractive to the American people than his personality, Sen
Mitchell issued an eloquent appeal urging him to recognise that "it is possible
for Americans to disagree with you and still love their country."

Mr Robert McFarlane, former National Security Adviser, has been granted an
opportunity to reappear before the Iran Contra committee today, it was disclosed
late yesterday.

It was unclear why he had asked to do so, but it is assumed he is likely to take
issue with some of the assertions made by Lt-Col North about how decisions were
taken in the White House while he was there.  Mr McFarlane resigned in December
1985.

LANGUAGE: ENGLISH

GRAPHIC: Picture Oliver North and John Poindexter, two keys to the question of
how much President Reagan knew; Picture, no caption

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                              136 of 614 DOCUMENTS

                        Financial Times (London,England)

                             July 14, 1987, Tuesday

Poindexter Set To Take The Stand

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 696 words


Rear Admiral John Poindexter, probably the single most important witness at the
Congressional inquiry into the Iran-Contra scandal, is expected to appear before
the joint House-Senate panel in Washington this week.

For the US public, the admiral will be best placed to answer the prime question:
Did President Ronald Reagan know about the diversion to the Nicaraguan Contra
rebels of profits from secret US arms sales to Iran?  As Mr Reagan's National
Security Adviser during most of 1986 - until he was removed when the scandal
broke last November 25 - Admiral Poindexter enjoyed daily access to the
president.

More than any previous witness, he knows what Mr Reagan was told about the
scheme to divert money to the Contras during a Congressional ban on US military
aid to them.

Adm Poindexter could strip away Mr Reagan's one enduring denial in the affair -
that he knew nothing about the diversion.

Yet this, by itself, is not of paramount importance because the majority of
Americans do not believe the president's denial.  Indeed, since the Iran arms
deals became public knowledge, the president and his advisers have been, at the
very least, casual about telling the truth.  This is best illustrated by their
refusal to admit that Mr Reagan authorised the barter of US arms for American
hostages held in Lebanon.

Far more revealing and damaging would be the admiral's account of duplicity,
incompetence and unnecessary secrecy which pervaded the Reagan administration
and led directly to the shambles of the Iran-Contra affair.

A perpetual pipe-smoker, Adm Poindexter, 50, became national security adviser in
January 1986, after the resignation of Mr Robert McFarlane.  It is widely
accepted that the latter was pushed out of the White House by Mr Reagan's
imperious chief of staff at the time, Mr Donald Regan.

Mr Regan - recognising that the adviser's post had declined in influence since
the globe-trotting days of Dr Henry Kissinger - was determined to keep it that
way.

Adm Poindexter, a boffin who graduated head of his class at the US Naval Academy
in 1958, had none of Mr Regan's skills in political infighting to challenge him.
Instead, he retreated into his office, quietly tapping out commands on his
internal White House computer, supervising Lt-Col Oliver North's bewildering
array of covert operations around the world.

A conservative and devout christian, Adm Poindexter will argue to the committee
he was unaware of some of Col North's activities.

In support, he will use the colonel's earlier testimony that the latter reported
frequently to the late Mr Willian Casey, CIA Director, thereby by-passing the
admiral.

In general, though, he is expected to stand firm on the principle of Contra
support, even during the Congressional ban, and argue strongly for wide
discretionary powers in support of the president's foreign policy.  Whatever the
validity of these arguments, the admiral's most immediate problem is the
television cameras.

He will cut a sharp contrast with Col North, whom he supervised at the National
Security Council and whose testimony last week captured the emotional support of
thousands of Americans.  An icy figure whose bureaucratic language has none of
the barrack room colour of the colonel's, Adm Poindexter is unlikely to inspire
the same sympathy and so can expect far rougher treatment by the committee.

Col North's core defence - that he was acting under orders - has also made
things far more difficult for his former boss.  "The buck stops at Poindexter,"
said one Congressional staff man last week - "unless he passes it on to the
president."

No-one outside a small circle of Committee officials and members knows what Adm
Poindexter has said in his four private meetings, in preparation for his public
appearance before the Committee.

So far, the clearest hint that he obtained presidential approval for use of the
profits from Iran for covert operations (including perhaps the Contra support
operation) is in a memo of September 15 from Col North to Adm Poindexter.  That
could be the "smoking gun" memo.

The question this week will be whether Adm Poindexter decides to pull the
trigger.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            July 15, 1987, Wednesday

North Testimony Disrupted By Party Infighting

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 360 words


The congressional hearings investigating the Iran/Contra scandal yesterday were
disrupted by an hour-long row between Republicans and Democrats over marine Lt
Col Oliver North and his efforts to help the Nicaraguan Contra rebels.

The row erupted after a House Republican member, Mr Jim Courter of New Jersey,
requested that Col North be allowed to present a 25-minute long pro-Contra slide
show.

Democrats protested that this would amount to free television advertising for
the Contra cause since the public hearings are being broadcast daily on US
television.

The dispute marks the first time in nearly 10 weeks of hearings that the joint
House-Senate panel has fallen victim to partisan infighting between the Democrat
majority and the Republican minority.

Senator Daniel Inouye, the Hawaii Democrat and Watergate veteran who chairs the
Senate side of the committee, in a compromise ruling, allowed the leading
Republican on the House side, Mr Dick Cheney of Wyoming an extra 20 minutes to
question Col North.

Col North then obliged by describing the slide show which between 1985 and 1986
he had given to potential private donors to the Contra cause.  The slides
featured Mr Andrei Gromyko, the former Soviet Foreign Minister, describing the
Caribbean region in March 1983 as "boiling like a cauldron."

Other slides included photographs of Soviet communications sites in Cuba,
pictures of Soviet Hind helicopters, an East German school book showing children
learning to count by using AK47 rifles, and finally, the 57th slide, a
photograph of the grave of a Contra resistance fighter.

It was Col North's sixth day of testimony yesterday and some of his magic was
beginning to wear thin.  He was followed later in the day by his one-time boss
and President Reagan's former national security adviser, Mr Robert McFarlane.

Col North marked the end of the gruelling testimony and cross-examination before
the panel by walking out of the Senate Caucus room, accompanied by his wife
Betsy, to the television cameras outside.

He thanked the American people for their support and good wishes, saluted and
left, surrounded by US Navy bodyguards.

LANGUAGE: ENGLISH

GRAPHIC: Picture Senator Daniel Inouye, right, and Senator Warren Rudman,
respectively chairman and vice-chairman of the Contra hearings

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                              138 of 614 DOCUMENTS

                        Financial Times (London,England)

                            July 15, 1987, Wednesday

McFarlane Hits At North Claims

BYLINE: Our Washington Staff

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 990 words


Mr Robert McFarlane, President Reagan's former national security adviser, last
night disputed key elements in the testimony of Marine Lt Col Oliver North at
the Iran/Contra hearings.

Mr McFarlane in effect gave a boost to the Administration by reviving the
impression of Col North as an officer acting to some extent on his own
initiative.

But in a politically significant move, Mr McFarlane took issue with the
administration and Col North for embarking on covert operations which
sidestepped Congressional control.  "Accountability is at the heart of our
system of government," he said.

Mr McFarlane, who supervised Col North for more than two years while the Marine
served on the National Security Council staff, said it was not true that he had
authorised Col North to engage in fund raising activities on behalf of the
Nicaraguan contra rebels.

He also challenged Col North's claim that both had engaged in a cover-up
regarding two secret US arms shipments via Israel to Iran in late 1985.

Mr McFarlane also took issue with Col North's claim that senior US officials
including the late CIA director Mr William Casey had sanctioned the creation of
an "off the shelf, self-financing" agency for covert operations around the
world, without the knowledge of Congress.  "This is untrue because it is
unthinkable," said Mr McFarlane who obtained special permission from the
chairman of the Senate Select Committee, Senator Daniel Inouye of Hawaii, to
appear for a second time at the public hearing.

Mr McFarlane's testimony provided the first factual challenge to Col North's six
days of testimony which had won the emotional support of millions of Americans
who saw him as both a patriot and a scapegoat for the Reagan Administration in
the Iran Contra affair.

Today Col North's one time boss and Mr McFarlane's successor as National
Security Advisor, Rear Admiral John Poindexter, appears before the committee.
He too should be able to confirm or deny whether Col North obtained approval for
his activities on behalf of the contras during the Congressional ban on US
military aid between 1984 and 1986.

Yesterday's hearing was marked by the first outbreak of bickering and deep
partisanship as House Republicans attempted to capitalise on Col North's
popularity.  Senator Inouye, said that Col North had become a hero in the public
mind, but he said he was deeply troubled by some of Col North's testimony.  "Our
government is not a government of men," he declared, "it is a government of
laws."

Congressman Lee Hamilton of Indiana said patriotism was not just a matter of
individual courage, it also was patriotic to quietly respect the law.  He added:
"A few do not know what is better for America than Americans themselves.

Eearlier in the day, Col North said he had been offered a Dollars 1 m bribe by
an Iranian middleman in order to keep him as a channel for the arm sales to
Iran, but he turned down the bribe.

With Col North's testimony giving a burst of favourable publicity for the
Contras, President Reagan seized the opportunity yesterday to make an
impassioned plea for US support of the Contras.

In doing so, he was attempting to make some capital out of the unexpectedly
spell-binding performance of Col North at the congressional hearings.

The President said that once the hearings were over he would break his
self-imposed silence, stand on the roof and "yell."

With Republican members of the investigating committees provoking a
confrontation over whether Col North should be permitted to present a slide-show
he used to promote the Contra cause, President Reagan made clear that one of the
things he would "yell" about would be his fierce commitment to the rebels.

Asked about suggestions by White House officials that the Administration was
planning to increase its budget request for Contra aid from Dollars 105 m (65 m
Pound (pds)) to about Dollars 140 m, Mr Reagan said: "My position is well known.
A disinformation campaign from the Sandinista Government has kept the people
from knowing the facts of what is going on in that country.  I think the only
decent thing to do is for the American people to continue the aid."

However, Col North's appeals for the Contras have presented the White House with
an opportunity to use Col North's charisma to press a policy which is dear to Mr
Reagan's heart.

Moreover, the issue of Contra aid is one around which many Republicans can rally
and one which divides the Democratic Party on Capitol Hill.  Yesterday's
decisions - by Mr Reagan to speak out on the issue and by the Republicans to
focus more attention on it in the hearing room - suggest that Mr Reagan and his
supporters on Capitol Hill are working together to make the most of the
opportunity.

The dispute on the hill yesterday marked the first time in nearly 10 weeks of
hearings that the joint House-Senate panel has fallen victim to partisan
infighting between the Democrat majority and the Republican minority, and is
largely due to the magnetic performance of Col North.

However, how long Col North's public popularity will last is an open question.
Polls suggest he has done little to influence public opinion on particulr
issues.  Most Americans continue to say they oppose the President's backing for
the Contras.

On the other hand, the President's efforts to divert attention from the hearings
on Capitol Hill by talking about his so-called economic bill of rights and
budget reform have fallen flat.

This is worrying to the White house, especially because Admiral Poindexter, the
key witness who met with Mr Reagan daily while the Iran-Contra operations were
underway, is poised for his appearance on Capitol Hill.

Mr Marlin Fitzwater, for the White House, said yesterday that as soon as the
hearings were over Mr Reagan would make his views on them known.  Whether this
would be in the form of a speech, a press conference or a television address has
yet to be decided.

LANGUAGE: ENGLISH

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                            July 15, 1987, Wednesday

All-Star Cast

SECTION: SECTION I; Men & Matters; Pg. 20

LENGTH: 152 words


Who said that the Iran Contra hearings on Capitol Hill were devoid of culture?

Yesterday the committee staff turned over yet more sheafs of documents which
this time contained some bizarre but highly revealing code names used by Lt Col
Oliver North.

Clearly the colonel has a strong interest in classical music.  President Reagan
is codenamed Beethoven.  His former national security adviser Rear Admiral John
Poindexter is known as Schubert.  His one-time boss, Robert McFarlane, is
codenamed Gershwin, after the modern American composer.  And Col North himself
is known as Wagner, after the great German romantic composer.

Out cultural allusions include George Shultz, the US Secretary of State as
Moliere, and Casper Weinberger, US Defence Secretary, as Shakespeare.

But Col North's codename tells us most about the affair, because Iran Contra has
truly been President Reagan's Gotterdammerung.

LANGUAGE: ENGLISH

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                              140 of 614 DOCUMENTS

                        Financial Times (London,England)

                            July 15, 1987, Wednesday

Reagan Will Break Silence In Defence Of Contra Rebels

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 478 words


President Ronald Reagan went on the political offensive yesterday in response to
Lt Col Oliver North's impassioned pleas on behalf of the Contra rebels in
Nicaragua saying that he would break his self imposed silence on the
congressional hearings and 'stand on the roof and yell' when they are finished.

With Republican members of the investigating committees provoking a
confrontation over whether Col North should be permitted to present a slide show
he used to promote the Contra cause, President Reagan made it clear that one of
the things he would 'yell' about would be his fierce committment to the rebels.

Asked about suggestions by White House officials that the Administration was
planning to increase its budget request for Contra aid from Dollars 105 m to
around Dollars 140 m, Mr Reagan said: 'My position is well known.  A
disinformation campaign from the Sandinista Government has kept the people from
knowing the facts of what is going on in that country, I think the only decent
thing to do is for the American people to continue the aid.' Col North's
testimony over the past week has been damaging to the President to the extent
that it has focused national attention on the Iran/Contra scandal and because of
the way Col North has pictured himself as acting on the orders of top
presidential aides such as National Security Advisers, Mr Robert McFarlane and
Rear Admiral John Poindexter.

But his appeals for the Contras have presented the White House with an
opportunity to use Col North's charisma to press a policy which is dear to Mr
Reagan.

The issue of Contra aid is also one around which many Republicans can rally and
it is one which divides the Democratic Party on Capitol Hill.  The decision by
Mr Reagan to speak out on the issue and by the Republicans to focus more
attention on it in the hearing room suggests that Mr Reagan and his supporters
on Capitol Hill are working together to make the most of the opportunity.

How long Col North's public popularity will last is an open question.  Polls
suggest that he has done little to influence public opinion on particular issues
- most Americans continue to say they oppose the President's backing for the
Contras.

However, the efforts the President has made to divert attention from the
hearings on Capitol Hill by talking about his so called "Economic Bill of
Rights" and budget reform have fallen flat.  This is worrying to the White House
with Admiral Poindexter, the key witness who met Mr Reagan daily while the
Iran/Contra operations were underway poised for his appearance on Capitol Hill.

Mr Marlin Fitzwater, the White House spokesman said yesterday that as soon as
the hearings are over Mr Reagan will make his views on the hearings known
although whether this will be in the form of a speech at a press conference or a
television address has yet to be decided.

LANGUAGE: ENGLISH

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                              141 of 614 DOCUMENTS

                        Financial Times (London,England)

                            July 16, 1987, Thursday

Poindexter Takes Responsibility For Diverting Funds

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 765 words


Rear-Admiral John Poindexter, declaring it was his duty to protect President
Reagan, yesterday told the Iran/Contra Committee that he never informed him
about the secret diversion to Nicaraguan Contra rebels of funds from US arms
sales to Iran.

Admiral Poindexter's decision to assume responsibility for the possibly illegal
diversion removes a major burden for Mr Reagan.  But the former National
Security Adviser's first day of testimony on Capitol Hill contained several
other damaging disclosures for the President.

He testified to the joint House-Senate inquiry that he destroyed a crucial
document signed by President Reagan as early as December 1985 which explicitly
stated the President authorised the sale of arms to Iran in exchange for the
release of American hostages in Lebanon.

The revelation, which undercuts President Reagan's persistent denial that he
traded arms for hostages, caught the White House off guard.  Mr Marlin
Fitzwater, White House spokesman, denying that the Admiral's sworn testimony
damaged the President's credibility, said: "He (Reagan) doesn't recall seeing it
or signing it or reading it, but he doesn't have any problem with the context of
it as he sees it today."

Admiral Poindexter served as President Reagan's National Security Adviser
between January and November 1986 when the scandal broke and he was forced to
resign.  He had daily contact with the President, which makes him the single
most important witness called before the congressional committee.

During yesterday's live broadcast hearing Admiral Poindexter, appearing in
civilian clothes, spoke in a monotone voice which cut a sharp contrast with the
performance last week of Lt Col Oliver North, his direct subordinate at the
White House.

Lacking the medals and natural TV style of Col North, Admiral Poindexter told a
sober tale of a US Navy career bureaucrat willing in the end to walk the plank
for his president.  "It is always the responsibility of staff to protect their
leader," he said.

The admiral also backed claims by Mr George Shultz, the Secretary of State and
Mr Caspar Weinberger, Defence Secretary, that they were against the Iran arms
sale.

He traced the origins of the US arms sales to Iran in late 1985 following an
approach by the Israeli Government.  Two arms shipments, including anti-tank and
anti-aircraft missiles, were shipped by Israel to Iran with US approval.  But
the Reagan Administration discovered that this may have contravened US law.

Admiral Poindexter said President Reagan signed a "CYA" (cover your ass) memo
which retrospectively approved the arms sales and set out the President's
reasons for not informing Congress.  In the memo it is explicitly stated that
the plan turned on an arms for hostages swap.

In November 1986, when the arms sales became public, President Reagan denied
many times that he had traded arms for hostages, even when polls showed that the
majority of Americans did not believe him.

Admiral Poindexter said he realised the memo was politically embarrassing, so he
destroyed it.

He went on to describe how he learnt of the plan to divert substantial profits
to the Contra rebels from US arms sales to Iran.  Colonel Oliver North, a
middle-ranking White House aide, whom he supervised, recommended the diversion.

Admiral Poindexter said he thought it was a neat idea but he did not tell the
President because he realised it could be politically explosive.  "I was
absolutely convinced as to what the President's policy was with regard to
supporting the Contras," said Admiral Poindexter, who added that he wanted to
protect the President against any future embarrassing disclosures.

The Admiral agreed, however, that it was the only occasion when he had failed to
inform President Reagan of a significant policy initiative.

"If the President had asked me, I would have told him," said the Admiral,
puffing gently on his pipe, but he declared: "The buck stops here when done.  I
had authority.  I thought it was a good idea."

His first day of testimony yesterday supported Col North's earlier testimony
that he was acting under orders, though the Admiral agreed that he had given Col
North a broad mandate.  This appears to absolve President Reagan from direct
knowledge of the diversion, but not from the general responsibility for the Iran
arms sales which broke the commitment of allies and undercut the
Administration's stance on not dealing with nations sponsoring terrorism.

Admiral Poindexter said he was certain the President would have approved his
decision to divert money to the Contras.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            July 16, 1987, Thursday

North's Defence Of Secret Policies Cuts Little Ice On Capitol Hill

BYLINE: Stewart Fleming

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1073 words

HIGHLIGHT:
Stewart Fleming reports on a groundswell of anger among Congressmen who put
their faith in the constitution


"The American people have a constitutional right to be wrong," Senator Warren
Rudman, a staunch Republican, spat the words out in the direction of Lt Col
Oliver North, the soldier who for four days self-righteously lectured Congress
on its failures and inadequacies.

Senator Rudman, a bulldog of a man and no less passionate and articulate in his
convictions about American democracy than Col North, reminded the charismatic
colonel on Tuesday just how severely he had reprimanded the members of Congress
for their role in the Iran/Contra scandal.

"You are to blame," Colonel North had said, looking directly at the men in front
of him but also through them at the camera which was carrying his words to the
American people, "because of the fickle, vacillating, unpredictable on-again
off-again policy towards the (Nicaraguan) resistance."

It was, to say the least, an audacious assault on Congress from an individual
who confessed that he had expected to end up as the President's "fall guy" if
the Iran/Contra arms deals became public.  Many had expected him to succumb to
the role of whipping boy on Capitol Hill.

But in the final two days of the six-day testimony which he gave to the
Congressional committee investigating the Iran affair, Col North discovered that
the ground upon which he had chosen to defend himself - the privatisation of
foreign policy which enriched "profiteers," the creation of "slush funds" to
furhter Administration goals in Central America, the lying to Congress in order
to evade Congressional oversight - was a swamp.

The Republicans and Democratic Congressmen defending the constitutional
authority of Congress were on the high ground.

"I have to believe that your appearance in these proceedings is really a
reflection of something that has gone wrong in this country," Col North was told
by Senator David Boren, lamenting the passing of era when Congress and the White
House were able to forge a common policy stance.

"It was called a bi-partisan approach to foreign policy.  We had an old saying,
'we might fight amongst ourselves about domestic politics, but politics stop at
the water's edge.'"

Those were the days, he went on, in spite of the historic tension between
Congress and the White House, when President Dwight Eisenhower and Speaker of
the House Sam Rayburn understood that the country's interests could only be
served by a foreign policy partnership between the executive, the president and
the legislative branches of government.

It was a partnership which lasted through the first two post war decades when
men like Dean Acheson, Averell Harriman, Robert Lovett, John McCloy, George
Kennan and Charles Bohlen - The Wise Men, as a recent study of their lives
called them - were part of a cohesive foreign policy establishment.

But, as the authors note: "Vietnam ...  shattered the post World War 2 consensus
...  Vietnam forced nearly everyone, even the old guard, to choose sides between
hawk and dove."

As Rep Henry Hyde, another staunch Republican and supporter of the President
told Col North this week, the Iran/Contra scandal demonstrates that this
division still plagues America.

"When you have a liberal democratic Congress - God bless them all, the people
elected them and that's democracy and all that good stuff - and you have a
Conservative Republican President, you've got a recipe for gridlock."

Col North's defence, that the Congress could not be trusted with state secrets
(even implicitly, the eight most senior Congressional leaders, individuals that
the law provides must be notified about a covert action), that the President's
power to conduct foreign policy is not as fettered as his interlocutors
believed, and that Congress is too weak and indecisive, cut little ice on
Capitol Hill.

This President, Congressmen pointed out, denies that he knew the details of the
Contra funding.  As Rep Ed Jenkins, a Georgia Democrat, remarked: "Not a single
official elected by the people of the United States of America had any knowledge
about the use of the fund" created by the Iranian arms sales.

The lack of accountability about what Rep Lee Hamilton described on Tuesday as
"a policy ...  driven by a series of lies to our friends and allies, lies to the
Congress and lies to the American people," was what finally stuck in Congress's
gullet.

"You have," Mr Hamilton went on, "an extraordinarily expansive view of
presidential power.  You would give the President free rein in foreign affairs
...  I do not see how your attitude can be reconciled with the constitution of
the United States.  The constituion grants foreign policy-making powers to both
the President and the Congress."

Secret policies, he added, cannot succeed, especially secret policies on issues
such as aid to the Contra rebels which polls show do not command the support of
the American people.  "The means employed were a profound threat to the
democratic process" in a country whose constitution was drawn up to curb the
power of its president, in part because of the perceived abuse of power by a
king.

Already, as Senator David Boren pointed out, the Congressional intelligence
committees and the White House are privately trying to correct some of the
weaknesses in a system of executive/legislative branch co-ordination over covert
operations.

"We have instituted new procedures in the intelligence committee to make sure
that secrets are kept ...  we don't even let members take their notes out any
more ...  if a single member of our committee leaks classified information their
resignation as a member of the committee will be demanded."

"We are," Sen Boren added, "working very hard to re-establish the kind of mutual
trust that is going to be necessary for us to be able to start policies and
sustain policies and speak to the rest of the world with a unified voice."

There is a history of deepening ideological cleavages in both foreign policy and
domestic policy during the past two decades.  Each president has disavowed his
predecessor.  The circumstances surrounding the Iran/Contra arms deals, however,
must make it more likely that, as former national security adviser Robert
McFarlane warned on Tuesday: "We risk the worst and most lasting injury of all -
the anger and bitterness of an atmosphere of unresolved and unending
constituional confrontation."

In that confrontation the President is not at present well placed to defend is
prerogatives.

LANGUAGE: ENGLISH

GRAPHIC: Picture, no caption; Picture Senator Rudman, left, and Senator
Hamilton.  Both delivered sharp rebukes to Col North

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                              143 of 614 DOCUMENTS

                        Financial Times (London,England)

                             July 17, 1987, Friday

Reagan Wants To Keep Congress Better Informed

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 432 words


President Ronald Reagan intends to seek talks on how to keep Congress better
informed of covert operations, the White House said yesterday.

The announcement came after damaging testimony to the Iran-Contra congressional
inquiry yesterday by Mr Reagan's former National Security Adviser, Rear Admiral
John Poindexter, who said he withheld information from Congress on an undercover
operation to arm the Nicaraguan Contra rebels.

Several leading Democrat senators also want to discuss changes in the oversight
laws which stipulate that Congress should be informed of covert operations
before they are carried out.  Many members, including Republicans, have been
shocked by the Reagan Administration's decision to bypass Congress while selling
arms to Iran and supporting the Contras.

Admiral Poindexter, spelling out the Reagan Administration's earlier effort to
get round the oversight laws by using the National Security Council staff, said
President Reagan in effect designated them to help the Contras during the
1984-86 ban.

"The president in effect wanted the NSC staff to make sure the Contras remained
alive until he could turn the vote around in the Congress," he said.

Admiral Poindexter on Wednesday declared President Reagan innocent of all
knowledge of the diversion of profits from the arms sales to the Contras, saying
he approved the scheme and did not inform Mr Reagan.  This was to protect him
from political embarrassment.

The 50-year-old admiral thus removed suspicion that Mr Reagan knew about the
diversion of funds to the Contras, but his testimony is unlikely to change the
American public's general scepticism and his tale of deceit and intrigue within
the administration still leaves the President vulnerable.  He has 18 months to
serve in his term.

The congressional inquiry, which was stopped in its tracks by the virtuoso
performance before the cameras of Colonel Oliver North, the Admiral's White
House surrogate, has three weeks to run with several key witnesses to be called
to testify.

Several Democrat members are unhappy about the way the committee chairmen
allowed Colonel North and his abrasive lawyer Mr Brendan Sullivan to dominate
the proceedings.  They are also critical of the method of questioning by the
counsel to the House and Senate.  Mr John Nield, chief House counsel, is coming
under fire for his rambling style which prevented members countering Colonel
North's highly political statements in support of the Contras.

"Colonel North was the turning point for the committee and they blew it," said
one congressional observer.

LANGUAGE: ENGLISH

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                             July 17, 1987, Friday

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 38

LENGTH: 110 words


Lionel Barber in Washington adds: Mrs Thatcher is expected to talk extensively
about arms control and the Gulf when she meets President Reagan in Washington
today.

US officials said yesterday that Mr Reagan and his senior aides will urge
Britain to play a larger role in the Gulf where US warships are shortly to begin
escorting Kuwaiti oil tankers under the American flag.

Mrs Thatcher, aware of the decline in the President's authority at home because
of the Iran-Contra scandal, is likely to give the 76-year-old President, a
personal friend and conservative ally, a pep talk, pointing out that US
leadership abroad is vital to Western interests.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            July 18, 1987, Saturday

Thatcher Declares Absolute Faith In President Reagan

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 540 words


Mrs Thatcher, the Prime Minister, yesterday declared that she had absolute trust
in President Reagan and scolded those who argue that his presidency has been
irreparably damaged by the Iran-Contra scandal, writes Lionel Barber in
Washington.

"I believe he is a great leader," she told viewers of US breakfast TV as she
prepared to begin a 12-hour sweep through Washington to meet President Reagan,
senior US cabinet ministers, congressional leaders, and the current and future
chairman of the Federal Reserve.

At the end of the talks, the two leaders called for a world-wide arms embargo on
Iran and Iraq if the two countries rejected United Nations appeals for an end to
"this bloody and senseless conflict."

The President said: "It is time for an immediate end to the Iran-Iraq war and we
believe that UN Secretary General Mr Perez de Cuellar should personally
undertake a mission to achieve that end."

It was Mr Reagan's first public call for the personal involvement of Mr de
Cuellar.

Mrs Thatcher's mission was, in the words of a senior British official, to
"encourage and prompt" her old conservative friend and ally, President Reagan.

Throughout the day, she stressed the need for American leadership.

"Your President is uniquely able to give it and will give it," she declared in a
direct address to the American people via the network TV cameras assembled
outside the White House.  In one of four breakfast TV interviews wrapped up in
30 minutes, the 61-year-old British leader spoke more lyrically: "America is the
flagship of freedom ...  She must sail into the sunrise and not look back at
what may or may not have happened."

The Iran-Contra affair had distracted the American public and the Reagan
Administration for six months and led to a slump in Mr Reagan's standing in the
polls.  But Mrs Thatcher was determined to have it her way yesterday, driving
home the message that other issues - arms control, the Middle East, the federal
budget - were far more important.

British officials said Mrs Thatcher was optimistic about the prospects for a
superpower agreement to eliminate medium-range missiles in Europe, to be signed
at a summit between Mr Reagan and Mr Gorbachev in Washington later this year.

Mrs Thatcher played down some fears in Washington that the Soviets were stalling
on an arms deal in order to test allied resolve.

"I would not say they are dragging their feet, but there may be a bit of
brinkmanship." Mrs Thatcher then suggested that Mr Gorbachev needed a deal if he
was to continue with his "remarkable and historic" economic reform programme in
the Soviet Union.

Elsewhere, the Prime Minister urged the Administration not to miss the
opportunity of a Middle East peace settlement.

Her final agreed statement appeared to fall short of anything concrete: "We
explored how an international conference might contribute to bringing about such
(direct) negotiations between the parties."

US officials were struck as usual by Mrs Thatcher's boundless energy and her
attention to detail, and appeared unperturbed by her obvious desire to give a
pep talk to the 76-year-old president.  But her assessment of Mr Reagan defies
political gravity: she may be up, but he is definitely down.

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                        Financial Times (London,England)

                             July 20, 1987, Monday

Reagan Calls On Congress To Continue Contra Funds

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 222 words


President Ronald Reagan, seeking to capitalise on the increased support for the
Contra rebels in Nicaragua and to try and regain the political initiative as the
Congressional hearings into the Iran/Contra affair move towards their close, has
again called for Congress to commit itself to continuing to provide funds for
the rebels.

"The American people are tired of the off-on again policy in Central America,"
Mr Reagan said in his weekly radio address on Saturday.

As Mr Reagan was making his appeal, eight prospective Democratic candidates for
president were signalling at a party convention in Cleveland, Ohio, that they
intend to try and make the Iran/Contra affair a campaign issue.

Each of the Democrats attacked the President but the harshest words came from
Senator Joe Biden who described the arms for hostages deals as "morally
repugnant."

The congressional hearings resume this week on Capitol Hill but there is
increasing evidene that public interest in them is beginning to wane.

Only five more witnesses will testify after Rear Admiral John Poindexter, the
former National Security Adviser finishes.

Three of these will be current top administration officials, namely Mr George
Shultz, the Secretary of State, Mr Caspar Weinberger, the Secretary of Defence,
and Mr Ed Meese, the Attorney General.

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                        Financial Times (London,England)

                             July 21, 1987, Tuesday

Admiral Defends Silence On Arms Deal

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 438 words


Rear Admiral John Poindexter, in his fourth day of testimony before the
Congressional committees investigating the Iran-Contra affair, angrily defended
his management of the covert operations yesterday, saying, "I don't have any
regrets and I am not going to apologise."

Asked specifically by Congressman Tom Foley, the Democratic majority leader in
the House, whether he felt US policy of trying to impose an arms embargo on
Iran, the so-called Operation Staunch, had been "seriously damaged" by the US
arms sales to Iran, the admiral responded: "Absolutely not."

He claimed that US policy was "not an arms embargo against Iran.  We do not
just, all of a sudden decide to embargo arms to Iran.  "The policy objective
there was an end to the Iran-Iraq war."

Faced with charges from Republican and Democractic members of the committee
that, as Mr Foley put it, the operations had been "bungled," Adm Poindexter
defended his decision not to tell even top Congressional leaders about the
arms-for-hostages deal with Iran or the diversion of the profits to support the
Contra rebels in Nicaragua.

Commenting on the admissions by the admiral, and Lt Col Oliver North, that they
had misled Congress, Mr Richard Cheney, now a Congressman and White House chief
of staff during President Gerald Ford's administration, said: "The reason for
not misleading the Congress is a very practical one.  It's stupid."

Adm Poindexter bristled as Senator Paul Trible, another Republican drew from him
the admission that he had not ensured that detailed financial accounts of the
arms sales proceeds, and the private funding for the Contras, had been kept.
Instead, he had relied on his "trust" and confidence in Col North and former
General (Richard) Secord," the private businessman who helped to manage the
undercover deals.

Although several senior adminstration officials, including Mr Edwin Meese, the
Attorney-General, and Mr George Shultz, Secretary of State, will be called to
testify in the next two weeks, it is already clear that, with Col North's
testimony over and Adm Poindexter likely to finish testifying tomorrow, the wind
has gone out of the inquiry.

Supporters of President Ronald Reagan are arguing that there is not much more to
learn about the Iran-Contra arms deals.  They assert: The major questions have
been answered; the questioning is now (if it was not before) being drawn out
simply to pillory the adminstration; the sooner it is brought to an end the
better and Congress can debate what action, if any, is needed to try to restore
a better working relationship between Capitol Hill and the White House.

LANGUAGE: ENGLISH

GRAPHIC: Picture John Poindexter as unapologetic pipeman and star witness

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                        Financial Times (London,England)

                             July 24, 1987, Friday

Shultz Admits Being Kept In Dark Over Arms Sales Policy

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 645 words


Mr George Shultz, US Secretary of State, conceded yesterday that other top US
officials, including by implication President Ronald Reagan, had kept him in the
dark about key events in the Iran/Contra affair

In a gripping day of testimony to the Congressional committee investigating the
arms scandal, Mr Shultz stripped bare the tensions which had grown between
himself and members of the White House staff.  On three occasions since taking
office he had tendered his resignation, he said.

Mr Shultz, a man who prizes his honesty, laid blunt claim during his testimony
to being President Reagan's top foreign policy adviser and spokesman.  But he
was forced to admit that in two vital areas of US foreign policy, the Middle
East and Central America, he was not told of initiatives which have damaged
Washington's credibility and cast a shadow over his management of US relations
with its allies.

He disclosed that last August he had submitted his resignation because: "I felt
a sense of estrangement ...  I knew the White House was very uncomfortable with
me."

He knew this because "some people in the White House staff" tried to stop him
getting approval for foreign trips using aircraft which the White House is
charged with managing.  His relations with the White House staff developed into
a kind of "guerrilla warfare," Mr Shultz said.

He disclosed, too, that he had earlier tendered his resignation in mid-1983 when
he was told of a secret trip made to the middle east by Mr Robert McFarlane,
then an official of the National Security Council.  In 1985 he offered his
resignation during a controversy over lie detector tests.

Mr Shultz did not try to disguise his low opinion of decisions taken by Admiral
John Poindexter, the former national security adviser who testified to the
committee last week.  He insisted that Mr Poindexter had exceeded his authority
by making a number of key decisions without clearing them with the President.

He was sharply critical of the role of the national security council staff,
indicating that the time had come to trim the power of the council.

He also left no doubt in the minds of the committee that he was also critical of
the part played by the CIA under the late Mr William Casey in the Iran/Contra
affair.

He said he believed it had supplied faulty intelligence to the White House to
support the covert policy initiatives it favoured, and added that he believed
that the functions of intelligence gathering and policy making needed to be
separated.

But Mr Shultz reserved his sharpest criticism for the National Security Council
staff, and particularly Mr Poindexter, repeatedly challenging Mr Poindexter's
testimony.

Mr Shultz had previously said he had had fragmentary knowledge of the decisions
authorised by the President and co-ordinated by Mr Poindexter, when national
security adviser, and by his assistant, Lieutenant Colonel Oliver North, to sell
arms secretly to Iran.  Yesterday he said that he first learnt of the US
decision to sell arms directly to Iran from newspaper reports in November last
year.

Mr Shultz has previously said he had had fragmentary knowledge of the decisions
authorised by the President and co-ordinated by Admiral John Poindexter, the
then national security adviser, and by his assistant, Lieutanant Colonel Oliver
North, to sell arms secretly to Iran.  Yesterday he said that he first learnt of
the US decision to sell arms directly to Iran from newspaper reports in November
last year.

Showing flashes of anger as he was questioned about his ignorance in nationally
televised hearings, Mr Shultz said "it made me sick to my stomach" when he had
learned, many months after the fact, that key Iran-Contra middlemen had
discussed efforts to release terrorists from a Kuwaiti prison as part of a
complex deal to secure the release of American hostages in Lebanon.

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                        Financial Times (London,England)

                             July 28, 1987, Tuesday

Besieged Meese Faces Test Of Credibility

BYLINE: Stewart Fleming

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1003 words

HIGHLIGHT:
The Contra panel will question the US Attorney General about a suspected
cover-up, Steward Fleming reports


"Is Meese Corrupt, incompetent or under attack by political foes?" ran the
headline over a profile in the New York Times earlier this month of Attorney
General Edwin Meese, the Reagan Administration's top legal officer.

It is a question which will occupy the minds of the members of the Congressional
Committees investigating the Iran/Contra affair when they assemble today to hear
Mr Meese answer questions about his role in the scandal.

For how Mr Meese comports himself could help to deepen or dispel the suspicion
that White House officials sought to cover up damaging details of the affair
when it erupted last November.

Mr Meese's answer will also affect the public standing of a man whose ethics
have been at issue for three years.  Now those ethics are under examination
again, amidst reports that some White House officials believe he ought to
resign.  They fear the continuing investigations of his private financial
dealings are damaging both the President and the Republican Party even if he is
cleared of allegations of misconduct.

An affable if zealous figure, as Deputy District Attorney in Almeda County
California Mr Meese amused himself in the evenings by listening to police radio
bands.  Along with Defence Secretary Caspar Weinberger, Mr Meese is the last of
the California conservatives who came to Washington with the President in 1980
still to hold high office.  He was Chief of Staff to then Governor of California
Ronald Reagan in 1969-1975.

In his capacity as Presidential Counsellor, he enjoyed both the new President's
trust and ready access to the Oval Office.  Soon after his arrival, press
reports were describing him as the Administration's "Prime Minister" or "Deputy
President."

But over time, and to the dismay of the President's conservative supporters Mr
Meese's influence waned.

A Special Counsel was appointed in 1984 to inspect his financial dealings and to
investigate whether he had helped to arrange Federal jobs for people who had
helped him financially.  Though he was cleared of any wrongdoing, the
associations weakened him politically.

In 1985 Mr Meese, nominated by Mr Reagan as Attorney General, was confirmed by
the Senate; but only after his critics led by Senator Joseph Biden had fought a
fierce rearguard action to try and block the appointment.

As Attorney General Mr Meese has proved to be the aggressive and energetic
advocate of conservative social causes which his political enemies anticipated.
In the process, he has turned himself into what one of his colleages described
recently as "the voodoo doll of this Adminstration.  Everyone is trying to put
the pin in."

Under his leadership the Justice Department has been more energetic in its
efforts to limit the scope of civil rights laws to protect broad groups such as
blacks and women from discrimination, to challenge the legality of abortion and
to restrict the rights of criminals by, for example, easing rules governing the
legality of evidence which police can present in Court.

Mr Meese has had limited success in the Courts in achieving his goals, not least
because the Supreme Court has rejected the legal arguments he supports on a
number of issues, notably his interpretation of the civil rights laws.

But his critics agree that he has helped to shift the centre of gravity of
public debate on many of these issues.  They fear too that if Justice Robert
Bork, Mr Reagan's conservative nominee for the vacant slot on the Supreme Court
is appointed, then one of the biggest barriers to the conservative social agenda
will fall.

Mr Meese is seen as one of Justice Bork's strongest supporters.  But he has been
perceived to be keeping his distance from the Bork nomination for fear that his
own political difficulties will damage Judge Bork's confirmation prospects.

As Mr Meese takes the witness chair today he has many political enemies on
Capitol Hill who will be hoping his political credibility, and with it the
credibility of the conservative causes he is associated with, will be damaged by
his testimony.

His position is already weak.  A staunch advocate of "law and order," Mr Meese
is again facing allegations that he violated ethics laws and Federal conflict of
interest regulations.  A special counsel is investigating his links with
Wedtech, a New York arms manufacturing company which he allegedly helped to
secure contracts.

But when he is questioned by the Iran/Contra committees today their focus will
not be on Mr Meese's personal finances, but on what he knew about the arms sales
to Iran and the diversion of the profits of the arms sales to the Contra rebels
in Nicaragua.

The questions are critical.  It was to Mr Meese, his old friend and his Attorney
General, that President Reagan turned in late November of last year to conduct
an initial internal probe of the affair.

Mr Meese's critics charge that that probe was so sloppily conducted by his
political aides that it looks more like part of a cover up than an
investigation.  If it could be demonstrated that Mr Meese had an intimate
knowledge of the covert operations earlier in the year, then the charge of cover
up would be more credible.

Col North for example suggested that Mr Meese was one of the top officials who
knew more about the Iran/Contra dealings than he has admitted.

As he answers the committees questions today Mr Meese knows that in the
background Mr Laurence Walsh, the special counsel, is conducting a criminal
investigation of the affair.  Mr Walsh has already identified Col North and
former National Security Advisor Admiral John Poindexter as targets of the
inquiry.

But he can be secure in the knowledge that by the time he leaves office the
Reagan Administration will have appointed more than half the over 700 Federal
judges in the land.  Whatever happens to his own politcal career, Mr Meese can
be confident that when he and President Reagan leave office, they will leave
behind a retinue of conservative judges who will help to keep the Reagan legacy
alive.

LANGUAGE: ENGLISH

GRAPHIC: Picture Edwin Meese, 'voodoo doll' for liberals

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                              150 of 614 DOCUMENTS

                        Financial Times (London,England)

                            July 29, 1987, Wednesday

Meese Fends Off Responsibility For Contra Affair

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 495 words


Mr Edwin Meese, the US Attorney-General and a close friend and adviser to
President Ronald Reagan, yesterday vigorously defended the investigation he
conducted last November into the Iran-Contra affair.

He insisted that errors in the President's presentation of the facts to the US
people, and misleading testimony to Congress at that time, were the
responsibility of "those who had knowledge" of the covert operations to sell
arms to Iran and divert profits from the sales to the Contra rebels in
Nicaragua.

"The truth is I did not have the knowledge to make any judgment of the accuracy
of testimony (to Congress)," Mr Meese said, adding that those who did included
Lt-Col Oliver North, the dismissed National Security Council aide.  In his
testimony this month, Col North had sought to shift responsibility to senior
administration officials, in particular Mr Meese.

However, Mr Meese did reveal for the first time that, in January 1986, he had
been briefed by Col North on the outlines of the Iran arms sales.  But he added
that thereafter his knowledge of the details of the operations was
"fragmentary."

He explained that a conscious decision had been taken to keep information about
the covert operations "compartmentalised" so that the information should not
leak out.

The attorney-general struck a conciliatory tone towards the investigating
Congressional committee and the Congress, one which contrasted sharply with the
assertions of Rear-Adm John Poindexter, former National Security Adviser, and
Col North, who seemed almost to revel in their conviction that Congress had no
right to know about the administration's covert policies.

"I would be remiss if I did not acknowledge one of the often stated goals of
these hearings - the need for a constructive relationship between the executive
and the legislative branches in the conduct of foreign policy," Mr Meese said.

Mr Meese is a controversial figure on Capitol Hill and a man who has been
weakened politically by questions about the conduct of his financial affairs and
allegations of influence peddling which are being investigated by a special
counsel.  He is expected to be given a tough grilling by the Congressional
committees.

His conduct of the initial probe into the Iran-Contra affair for the president
has been seen by some as evidence of an attempted cover-up, by others as an
expression of his incompetence.  "I tend to believe it was a case of gross
incompetence, not criminal intent.  I guess it is better to be dumb than
stupid," Senator Warren Rudman, vice-chairman of the committee, has said of the
investigation.

The questioning yesterday by the chief counsel to the House committee, Mr John
Nields, was not confrontational in tone - at least initially.  Mr Nields, who
also opened the questioning of Col North, has been criticised in Congress for
having been too aggressive then and giving Col North an opportunity to win the
sympathy of his television audience.

LANGUAGE: ENGLISH

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                              151 of 614 DOCUMENTS

                        Financial Times (London,England)

                            July 29, 1987, Wednesday

Meese Fends Off Responsibility For Contra Affair

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 486 words


Mr Edwin Meese, the US Attorney-General and a close friend and adviser to
President Ronald Reagan, yesterday vigorously defended the investigation he
conducted last November into the Iran-Contra affair.

He insisted that errors in the President's presentation of the facts to the US
people, and misleading testimony to Congress at that time, were the
responsibility of "those who had knowledge" of the covert operations to sell
arms to Iran and divert profits from the sales to the Contra rebels in
Nicaragua.

"The truth is I did not have the knowledge to make any judgment of the accuracy
of testimony (to Congress)," Mr Meese said, adding that those who did included
Lt-Col Oliver North, the dismissed National Security Council aide.  In his
testimony this month, Col North had sought to shift responsibility to senior
administration officials, in particular Mr Meese.

However, Mr Meese did reveal for the first time that, in January 1986, he had
been briefed by Col North on the outlines of the Iran arms sales.  But he added
that thereafter his knowledge of the details of the operations was
"fragmentary."

He explained that a conscious decision had been taken to keep information about
the covert operations "compartmentalised" so that the information should not
leak out.

The attorney-general struck a conciliatory tone towards the investigating
Congressional committee and the Congress, one which contrasted sharply with the
assertations of Rear-Adm John Poindexter, former National Security Adviser, and
Col North, who seemed almost to revel in their conviction that Congress had no
right to know about the administration's covert policies.

"I would be remiss if I did not acknowledge one of the often stated goals of
these hearings - the need for a constructive relationship between the executive
and the legislative branches in the conduct of foreign policy," Mr Meese said.

Mr Meese is a controversial figure on Capitol Hill and a man who has been
weakened politically by questions about the conduct of his financial affairs and
allegations of influence peddling which are being investigated by a special
counsel.  He is expected to be given a tough grilling by the Congressional
committees.

His conduct of the initial probe into the Iran-Contra affair for the president
has been seen by some as evidence of an attempted cover-up, by others as an
expression of his incompetence, not criminal intent.  I guess it is better to be
dumb than stupid," Senator Warren Rudman, vice-chairman of the committee, has
said of the investigation.

The questioning yesterday by the chief counsel to the House committee, Mr John
Nields, was not confrontational in tone - at least initially.  Mr Nields, who
also opened the questioning of Col North, has been criticised in Congress for
having been too aggressive then and giving Col North an opportunity to win the
sympathy of his television audience.

LANGUAGE: ENGLISH

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                              152 of 614 DOCUMENTS

                        Financial Times (London,England)

                            August 1, 1987, Saturday

Reagan 'Refused Pardon For North And Poindexter'

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 153 words


President Reagan rejected a pardon for Vice Admiral John Poindexter and Col
Oliver North, saying "I'll be darned if I'm going to accuse them of a crime,"
former White House Chief of Staff Donald Regan told the Iran Contra hearing
yesterday.

He said the idea was suggested to Mr Reagan in December, a month after a scandal
broke over secret White House arms sales to Iran and the possibly illegal
diversion of profits to Nicaragua's Contra rebels.

"Somebody brought it up to him - it was shut down right away.  That was
something the president wouldn't even listen to," Mr Regan said.

"His reasoning went along this sort of line - the grant of pardon means you
think somebody's committed a crime ...  and he didn't know what the crime was.

Admiral Poindexter resigned as National Security Adviser, and Col North was
fired from the National Security Council last November after the scandal was
exposed.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            August 4, 1987, Tuesday

Iran/Contra Affair 'A Chilling Story Of Duplicity'

BYLINE: Our Foreign Staff

SECTION: SECTION I; Back Page; Pg. 36

LENGTH: 465 words


The Iran/Contra affair was a chilling story of deceit and disregard for the rule
of law, the chairman of the Congressional investigating panel said yesterday at
the end of public hearings in Washington.

Senator Daniel Inouye, a Democrat, rounded off the televised hearings with a
stinging condemnation of the whole covert White House operation, involving arms
sales to Iran and the diversion of funds to the Contra rebels in Nicaragua at a
time when such aid was banned by Congress.

Although the 12 weeks of hearings still leave many questions unanswered, the
disclosures have deepened the gulf of mistrust between the White House and many
Congressmen.

They have also raised questions about the degree of top-level control over the
conduct of foreign policy.

"I see it as a chilling story, a story of deceit and duplicity and the arrogant
disregard of the rule of law," Senator Inouye said.  "It is the story of flawed
policy kept alive by a secret White House junta."

Voicing Congressional misgivings about the lack of accountability in the affair,
he said it had been carried out by "a secret government," who were mostly
members of the National Security Council but who were not accountable to a
single elected official "including apparently the President himself."

These sentiments were echoed by Senator Warren Rudman, a member of President
Reagan's Republican party.

He said the Iran/Contra affair represented abuse of power by the White House and
that Mr Reagan had authorised and implemented "an act of folly" in selling arms
to Iran.

The Congressional panel will hold private sessions to hear further witnesses,
including officials of the Central Intelligence Agency.

While the hearings did little for President Reagan's relations with Congress,
none of the 29 witnesses tied the President directly to the diversion of arms
sales profits to the Contras.

Although there were extraordinary revelations from some witnesses - Mr John
Poindexter, the former National Security Adviser, and his aide, Lt Col Oliver
North - the basic story of the complicated affair remained unchanged.

Mr Reagan will deliver a speech on the Iran/Contra affair next week, after
holding back during the weeks of testimony.

Mr Martin Fitzwater, the White House Press spokesman, said the President did not
intend to "go into every detail" about the testimony.  It is the overall issues
involved that the President wants to address," he said.

Meanwhile, independent counsel Lawrence Walsh is continuing his separate
investigation into the possibility of criminal prosecution of some of the
affair's main figures.

Nine of the public witnesses at the hearings testified under grants of immunity
- a method of ensuring that their words cannot be used against them in a future
prosecution.

LANGUAGE: ENGLISH

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                              154 of 614 DOCUMENTS

                        Financial Times (London,England)

                             August 7, 1987, Friday

Bush Tries To Clear Himself On Iran Affair

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 322 words


US Vice President Mr George Bush has made his clearest attempt yet to break free
of the Iran-Contra scandal which has hamstrung his campaign for the Republican
presidential nomination for the past seven months.

In an interview with the Washington Post, Mr Bush claimed that his truthfulness
had been vindicated by the public congressional hearings into the affair which
closed earlier this week.  He said his judgment could not be faulted by other
presidential candidates in the 1988 campaign because he had been "denied
information" about what was going on in the Administration.

Mr Bush's defence - similar to President Ronald Reagan's - is likely to cut both
ways in the eyes of opponents and the public.  While some will sympathise that
he was kept uninformed, others will ask why, as Vice President, he appears so
disengaged in the Iran policy.

In the interview yesterday, Mr Bush said he had not advised President Reagan
against selling arms to Iran because he had not heard strong objections to the
policy.  He had no idea of the fierce opposition of Mr George Shultz, US
Secretary of State, and Mr Caspar Weinberger, US Defence Secretary.

The arms sales broke US policy of neutrality in the Gulf War and of selling arms
to nations such as Iran identified as sponsoring terrorism.  Mr Bush chaired an
inter-agency task force on countering terrorism last year, during the arms
sales.  Mr Bush said Marine Lt Col Oliver North, the White House aide at the
centre of the affair, "made some mistakes, but was motivated by high purpose."

He said he had a high regard for Rear-Admiral John Poindexter, former national
security adviser, who shouldered the blame for the scandal, and believed he had
told the truth.

According to the latest opinion polls, Mr Bush enjoys a clear if shaky lead in
the Republican race.  He has by far the best organisation and plenty of money,
but he inspires respect rather than passion.

LANGUAGE: ENGLISH

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                              155 of 614 DOCUMENTS

                        Financial Times (London,England)

                             August 7, 1987, Friday

More Than His Image At Stake;
Mr Reagan And The Presidency

BYLINE: Stewart Fleming

SECTION: SECTION I; Pg. 12

LENGTH: 1837 words


When President Ronald Reagan retreats from Washington to his ranch in the
mountains north of Los Angeles next week, he will leave behind a city which
believes it is time to consign the Reagan era to the history books and move on.

Over the next few weeks, while he takes his summer holiday, the last set of
candidates hoping to take over his job in January 1989 will formally declare
themselves.  During the gruelling primary campaign leading up to the election in
November 1988, they will be seeking to demonstrate that they can fill a void
which Mr Reagan's failures have helped to create, and satisfy the national
yearning for change.

Mr John Sears, a former Reagan campaign manager and political strategist whose
advice is sought by many an ambitious Republican politician, explains America's
mood in this way: "In our moments when we are not frightened, Americans welcome
change.  The belief that we can make the future better is very important to us.
When it has left us we have been very poor in spirit.  We have no culture to
fall back on."

That a turning point in American political history is approaching is
unquestionable.  A new generation is coming to political power.  And of the
voters who will next year choose a President to lead them to the threshold of
the 21st century, almost half will be under the age of 40.

There are signs that old party loyalties are breaking down.  Mr William
Hamilton, a Democratic public opinion pollster, says that he has never seen such
volatility in party identification, and notes the growth of a shifting core of
voters who define themselves as independents.

When President Reagan was making huge inroads into the traditional "blue collar"
vote of the Democrats in 1980 and 1984, Republicans were relishing the thought
of a realignment which would make them the party with the natural majority.
Now, says Mr Hamilton, it is more a question of "de-alignment" than
re-alignment.

There is also evidence that Americans have tired of the self-congratulation
which characterised Mr Reagan's vacuous 1984 presidential election campaign.
They feel faintly threatened - "restive" is how Mr Hamilton describes it - and
only too aware of the country's problems.  Increasingly, polling data suggests
that Americans feel the US is "on the wrong track." Disillusion with business,
government and political leaders is resurfacing - not surprisingly, in the light
of scandals in the "Televangelist" community, arrests on Wall Street and
disclosures about the Iran-Contra affair.

The unease is most pronounced over the performance of the economy.  Americans
are anxious about how to respond to the economic and technological strength of
allies like Japan.  There is a sense that the world economy is impinging more on
their lives, threatening their jobs and standard of living.  The uncertainty is
mirrored in the unresolved debate on Capitol Hill about how tough and
protectionist to make the trade bill now being finalised.

There is too - at least among those who follow foreign policy closely - an
awareness that, in Mr Mikhail Gorbachev, the US faces a Soviet leader who has
succeeded in seizing the propaganda initiative from an ageing President, whose
competence in the foreign policy arena has been exposed by Irangate and who is
facing another potentially explosive challenge in the Gulf.

How such perceptions will influence the last 16 months of Mr Reagan's presidency
and the election of his successor is a subject of intense speculation.

Nonetheless, Mr Reagan has emerged from the Iran-Contra hearings in better
political health than many had predicted - and than some had hoped.  Public
opinion surveys show him with a job approval rating in the 46-52 per cent range
- extraordinarily high for a President in his seventh year of office and
persistently above the 40-42 per cent level to which it fell shortly after the
Irangate scandal broke.  So it seems the televised dissection of his
Administration's performance by congressional investigators has failed to erode
the President's public standing.

He has been fortunate in other respects as well.  The past few months have
provided a number of positive economic and political developments on which Mr
Reagan can capitalise when he returns to Washington in September.

After flirting with recession in the spring, when the world hovered on the brink
of a dollar crisis, the US economy is on course for continued sluggish growth
(although it remains vulnerable to swings in international investors' confidence
because of over-dependence on foreign capital).  The financial markets seem
prepared to take in their stride the rise in inflation - to between 4 and 5 per
cent from 1 per cent last year - hoping that it is temporary and that Mr Alan
Greenspan, new chairman of the Federal Reserve, lives up to his hard money
promises.

The unexpected windfall of an open seat in the Supreme Court will give the
President a chance to go on the offensive against the Democrats.  His nomination
of Judge Robert Bork, a conservative but one with solid judicial credentials,
has sewn dissension in their ranks.  Some of the party's liberals want to turn
Judge Bork's nomination into a constitutional confrontation between the White
House and the Senate over whether or not the latter is obliged to confirm
qualified but, in its view, ideologically biased nominees.

Even at the Iran-Contra hearings, the virtuoso performance of Lt Col Oliver
North, has boosted the cause of Contra aid.

Add in the prospect of a Washington summit with Mr Gorbachev to sign an arms
control agreement - a scenario apparently dear to Mrs Nancy Reagan's heart - and
the President has a number of items on his autumn agenda which may help divert
attention from less promising vistas.

Mr Reagan can feel he has at least the possibility of finishing his term neither
humiliated nor disgraced, as were three of his four immediate predecessors.
But, the fact remains that, even in the judgment of some of his most loyal
friends, he has been permanently weakened by the events of the past year.  The
polls show that he has not recovered his credibility, his most valuable
political asset.  A majority of Americans still believe he lied to them about
his knowledge of the Irangate details.

A no less enduring liability has been his party's loss of control of the Senate
to the Democrats last November.  Indeed some analysts argue that this factor
above all has caused cracks to appear in the foundations of his presidency at a
time when Mr Reagan was already struggling with "lame duck" status because of
the constitutional ban on re-election for a third term.

Finally Irangate has taken its toll - even if the damage done has been less than
expected.  When the country is looking for strong leadership, it has been faced
with the picture of a President who did not know what was going on in the White
House.  It has had to listen to officials, such as Mr George Shultz, the
Secretary of State, tell stories about "guerrilla warfare" within the
Administration.  And it has heard the former National Security Adviser, Admiral
John Poindexter, as good as admit that he was intent on misleading, if not lying
to, Congress.

If, as many expect, the independent counsel, Mr Lawrence Walsh, brings
indictments against some of the leading figures in the Irangate affair, then the
image of the Administration will be further tarnished.

What is worrying some Republicans, however, is that the White House is not
drawing the right lessons from both the evidence of the country's changing mood
and the reality of Mr Reagan's weakened, but still influential, position.  They
feel he should be helping them match up to the Democratic Party, which has been
building a legislative record on issues of public concern.

An outspoken public expression of this anxiety has come from Mr Kevin Phillips,
a Republican political analyst.  He argued in a Washington Post article that the
best thing that could happen to the Republican Party would be for President
Reagan's political influence to diminish further.  This "may enable the (party)
to catch up with the flow of history - by which I mean embrace a more moderate
ideology ...  And develop an understanding that the key demand and challenge on
the next presidency will be effective consolidationist government."

Similarly, a senior Administration official says one reason the White House has
not been as effective in shaping political compromises as many expected when Mr
Howard Baker, the former Senate majority leader, replaced Mr Donald Regan as
Chief of Staff, is that a hard core of ideological conservatives is blocking
moves to compromise with Capitol Hill.

Another symptom is his use of the veto to block legislation which cuts across
conservative principles.  The veto is one of the few weapons a President can
resort to once his powers of persuasion on Capitol Hill have been eroded - both
Presidents Eisenhower and Ford used the veto freely near the end of their terms.
There have been fears that Mr Reagan might adopt a sterile veto strategy and
prevent Congress from tackling urgent problems.

On the key issue of the federal budget deficit, there is still no sign of a
compromise.  The Democrats have succeeded in reaching at least the appearance of
unanimity by approving a budget resolution, in both chambers of Congress, which
challenges Administration priorities.  They propose to raise some taxes without
gutting the defence budget.

President Reagan, on the other hand, seems to have decided that, since he cannot
get what he wants in terms of cuts in domestic spending and guarantees on the
amounts for defence, and because the budget deficit reduction Dollars 38 bn (24
bn Pounds (pds) envisaged by the Democrats is modest, it is not worth
surrendering a tax increase.

The budget deficit may be an example of a more general trend.  Whereas in the
past, when his credibility was high, Mr Reagan succeeded in pushing the blame
for the deficit on to Congress, recent polls suggest that the public is no
longer so ready to swallow this line and that the Democrats have gained
credibility on the issue of fiscal responsibility.

The picture which is emerging is of a President who, particularly on foreign
policy, still has the capacity to play a significant role in the run-up to the
1988 election.  But he is weakened and must pick his fights carefully, as he
tried to balance the desire to defend his legacy and retain the loyalty of his
conservative supporters, against the need to be more than a mere obstacle to
Democrat initiatives on Capitol Hill.

Given the signs of public scepticism about much of his conservative agenda and a
public yen for problem solving - not confrontation - in Washington, the harder
Mr Reagan fights for his principles and finds himself cast in the role of
obstructing new initiatives, the more he will undermine his position and that of
his party.  It is a delicate balancing act and one the Democrats sense he is not
adept enough to accomplish.

LANGUAGE: ENGLISH

GRAPHIC: Drawing, no caption

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                              156 of 614 DOCUMENTS

                        Financial Times (London,England)

                           August 12, 1987, Wednesday

US-Iran Tribunal Clears The Decks

BYLINE: Laura Raun

SECTION: SECTION I; World Trade News; Pg. 4

LENGTH: 940 words

HIGHLIGHT:
Laura Raun reports on progress at the bilateral forum in The Hague


As Iran grows more diplomatically isolated and disdainful of world opinion it
nonetheless remains strikingly committed to a bilateral forum with one of its
most hated enemies.  The Iran-US tribunal, established in 1981 at the end of the
American hostage crisis has slogged through years of protracted hearings.  At
last, there may be light at the end of the tunnel.

The tribunal in The Hague was created under the Algiers Accord which ended the
15-month imprisonment of 52 US embassy staff members by militant Iranians swept
up in the fervour of the Khomeini revolution.

Washington broke diplomatic relations with Tehran in 1980 and the claims
tribunal is now the only bilateral link between the two countries.  It has the
task of arbitrating 4,000 legal claims amounting to at least Dollars 15 bn
arising from the Iranian revolution.

This is by no means the whole financial story between Iran and the West.  Iran
also has between 3,000 and 4,000 financial disputes with France, the UK and
other countries on an ad hoc basis outside a formal forum such as the tribunal.

Nestled in a tree-lined neighbourhood of the Netherlands' sleepy capital, the
tribunal has been plagued by physical beatings, verbal tirades and deliberate
delays - disposing of less than a quarter of its list in six years.

But despite hostility and cultural clashes the nine-judge tribunal has plodded
on, dealing one by one with the corporate, private and governmental claims.
Three chambers each with three judges - one Iranian, one American and one
neutral - hear the disputes.

Only 900 cases have been disposed of so far, with more than Dollars 872 m
awarded to US interests, primarily companies.  Iran has received more than
Dollars 154 m.  Most of this consisted of Iranian funds in New York which had
been frozen.  These were returned by the US in May.  The Dollars 451 m in
Iranian funds was the biggest decision yet although the largest commercial award
was Dollars 115 m which went last month to Sedco, an oil drilling company which
formerly belonged to the Texas governor.

A vast majority of the claims - 3,600 - are against Iran and the Iranians have
long argued that they need more time to deal with the immense caseload.  A
revolutaionary government, scars from the US economic sanctions, limited funds
and the war with Iraq have meant that lawyers in Tehran sometimes must write
their legal briefs in longhand by candlelight.

Mr Mohammad K Eshragh, who heads the Iranian delegation to the tribunal, minces
no words.  "The tribunal is not a just forum.  Under American pressure, justice
has been sacrificed for speed."

An articulate lawyer from the Iranian embassy in The Hague, Mr Eshragh complains
that the US judges, often with the support of the neutral ones, have
persistently rushed the proceedings.  Moreover, he asserts that many of the
claims are "baseless" and a waste of time, notably those alleging wrongful
expulsion from Iran and "fraudulent" dual nationality.

Cultural differences are a fundamental problem, he laments.  "It's a
revolutionary culture versus a Western culture."

In 1984 this antipathy overflowed and one Iranian judge, some say two, roughed
up a 69-year-old Swedish judge who was accused of consistently siding with the
Americans.  In the early days of the tribunal screaming matches during hearings
were fairly routine although more decorum now prevails.

Most of the 2,800 remaining small claims (less than Dollars 250,000) could be
dispatched with in short order, the Americans contend, adding that together they
are worth less than some individual big claims.  The tribunal itself costs
Dollars 6 m a year to run, with judges being paid around Dollars 160,000.

"We're in a climactic phase," observes one American judge.  He points to the
Dollars 115 m Sedco ruling two weeks ago, which set a precedent for a group of
much bigger oil expropriation cases still being heard.  Last month two interim
judgments were rendered, one in a Dollars 1 bn claim by a US oil consortium, the
other a Dollars 30 m claim by Amoco, the fifth largest American oil company.

A significant ruling in Iran's favour also was delivered last week, a decision
that rejected an American's argument that he had been wrongfully expelled from
Iran and was due compensation.  The judgment could set a precedent for the
thousands of other expulsion cases still pending.

In the autumn arguments will be heard in the largest case of all - an Dollars 11
bn claim by Iran over US military equipment bought during the Shah's regime that
was either shoddy or never received.  Cynics say it is this huge claim for
hundreds of helicopters and submarines that has kept Iran at the arbitration
table.

The American judge, who plans to leave at the end of this year, figures that by
then most of the big, intellectually stimulating cases will have been heard and
the tribunal could start wrapping up business.  He agrees with a colleague who
predicts the tribunal could end by 1989.

But Mr Eshragh fumes at the suggestions by the Americans that the tribunal could
begin to wind up after the current batch of big, commercial cases is finished.
"No we can't start winding down," he insists.  "We must carefully examine every
case.  The amount of a claim isn't so important in our culture.

After six years of forcing the Iranians and Americans together, however, the
tribunal seems to offer little hope of promoting a restoration of diplomatic
relations between Tehran and Washington.  High tension in the Gulf,
embarrassment over the Iran-Contras scandal and the latest diplomatic rows with
France and Britain bode ill for early progress.

LANGUAGE: ENGLISH

GRAPHIC: Picture Khomeini, little chance of reconciliation with West

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                        Financial Times (London,England)

                           August 12, 1987, Wednesday

Contra Gamble Pays Dividends For Brave New House Speaker

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1144 words

HIGHLIGHT:
Jim Wright's bold leadership may herald the revival of a bipartisan approach in
US politics, writes Lionel Barber


Outside the White House Mr Jim Wright, speaker of the House of Representatives,
stepped towards the cameras and in those familiar silken tones from Fort Worth,
Texas, proclaimed a new bipartisanship between President Reagan and the US
Congress on Central America.

Mr Wright's judgment last week may yet be premature, but few doubt that his role
in talks aimed at ending the civil war in Nicaragua and El Salvador has been a
bold exercise in political leadership.

In three hectic days, Mr Wright provoked the virtually unanimous opposition of
House Democrat colleagues, nudged the five Central American leaders to an
outline agreement and shifted the debate in Washington about the region's
conflicts away from military to diplomatic solutions.

In the past, the 64-year-old Mr Wright - a keen boxer until well into his 50s -
has been accused of leading with his chin.  A redhead with a tendency to
short-circuit in the face of criticism or dissent, he is not one of nature's
diplomats.  All of which left the cynics crowing last week that he had walked
into a trap laid by his arch-rival Ronald Reagan - a view which certainly
misjudges the man and his motives.

Mr Wright has suffered under the presidency of Ronald Reagan.  In 1981, when he
was House majority leader and next in line to succeed the genial Irish Bostonian
Thomas "Tip" O'Neill as speaker, he lamented his inability to swing Democrat
votes in the House against the President.

Time and again - on tax cuts and budget policy - he found himself swept aside.
"This has been the hardest year I've experienced in the Congress," said the
Texan.  "If they were all like this I'd have to have my head examined to stay in
the job."

When he finally took over as speaker this year Mr Wright, who was first elected
to the House in 1954, had some very clear goals.  With a Democrat majority back
in the Senate after the 1986 mid-term elections, he was determined to fashion a
domestic legislative record with Senator Robert Byrd of West Virginia, the
Democrat majority leader in the run-up to the 1988 Presidential campaign.  It
was vital, he felt, for the Democrats to show they could be the party of
government.

The Central American peace initiative fits into this category of constructive
action, though as one House Democrat said this week privately: "A lot of it has
to do with glory.  Jim sees his role as someone who makes things happen."

If the gamble was high-profile, it was also certainly high-risk.  The Democrats
are deeply split on the question of aid to the rightist Contra rebels fighting
the Sandinista Government in Nicaragua.  While some abhor the idea of the US
fighting a war in its own backyard through a surrogate army, others deeply
mistrust the intentions of the Sandinistas.

President Reagan, playing on those fears, was able to secure Dollars 100 m of
Contra military aid last year.  Mr Wright himself has occasionally wavered.  In
1983 when an ascendant White House thought they had him on board, he jumped ship
at the last minute (many believe a pro-Contra aid vote would have cost him the
speakership) but he has remained consistent in his interest in Central America.

He speaks Spanish fluently, knows the Costa Rican President Oscar Arias and the
El Salvador President Napoleon Duarte personally, and has visited the three
other states, Honduras, Guatemala and Nicaragua.

After the 1982 elections in El Salvador Mr Wright, breaking with his Democrat
colleagues, voted for a renewal of US aid to the Government.  At a time when the
right-wing death squads in the Salvadoran military were far from forgotten, it
was a brave move.  But Mr Wright reckoned President Duarte deserved a chance -
and today he is ready to credit Mr Reagan with a successful, non-military policy
to create democracy in El Salvador.

It is doubtful whether Mr Wright was the initiator of the Nicaraguan initiative.
Those close to events say that the original approach came from Mr Tom Loeffler,
a former Congressman from Texas, recruited by the White House as a lobbyist for
Contra aid to replace Mr Elliot Abrams, the abrasive assistant Secretary of
State.  When the votes were counted, it quickly became apparent that President
Reagan had little chance of securing a new round of military aid by September 30
(when the current Dollars 100 m runs out).  Mr Loeffler floated the idea of a
peace initiative.  Texan talked to Texan, and the word went back to the White
House that a bipartisan approach was a possibility.

To Mr Howard Baker - the former Senate Republican majority leader who became
White House chief of staff this year - it must have seemed like old times back
on Capitol Hill.  Of course, both sides made shrewd calculations.  According to
one account, Mr Baker secured the support of Mrs Nancy Reagan, First Lady, in
what was obviously a risky political enterprise.  Others say the Democrat
strategist in exile - Mr Bob Strauss - was privy to the deal and all agreed it
was vital to bring in Mr George Shultz - US Secretary of State - who had just
emerged from purdah after his convinving testimony to the Iran-Contra Committee.

Mr Caspar Weinberger, US Defence Secretary, was by contrast left out completely.
So too were the Contra leaders themselves, who happened to be in Washington on a
lobbying tour for more US aid.  Mr Wright's touch of class came with his
realisation that a bipartisan plan between President Reagan and Congressional
leaders would give impetus to the two days of talks between Central American
leaders in Guatemala City.

Having checked with the Nicaraguans and the Costa Ricans, he realised that
Managua would have great difficulty in rejecting a US plan and the Arias peace
plan.

On the other hand, Mr Wright managed to persuade the House minority leader, Mr
Robert Michel, that the Republican leadership should follow him.  By including
Mr Michel in the talks at an early stage - and arguing that the votes simply
were not there for Contra aid - he also won over the President.

Equally, many conservatives had little idea that events in Guatemala City would
move so fast.  They calculated that the diplomatic option would probably fail,
Mr Wright and his fellow Democrats would then be cornered and Contra military
aid in the bag.

Mr Wright's catalytic role contrasts sharply with the style of the previous
speaker, Mr O'Neill, who liked to closet himself for hours with colleagues
before moving.  If he was a cautious coalition builder, Mr Wright is a decisive
if impatient leader.

His reputation this week has undoubtedly been enhanced and he has temporarily
consigned Senator Byrd to the wings.  What Mr Wright's colleagues now want to
know is whether this display of bipartisanship will extend to other, equally
important troublespots in US policy-making, notably the bloated federal budget.
If Jim Wright has his way, it will.

LANGUAGE: ENGLISH

GRAPHIC: Picture Jim Wright, leading with his chin

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                        Financial Times (London,England)

                           August 13, 1987, Thursday

Reagan Contrite But Pledges Continued Support For Contras

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 581 words


President Ronald Reagan last night attempted to lay to rest the Iran-Contra
scandal and restore his image as an effective leader of the American people.

In a nationwide television address, he appealed for a renewal of trust between
his Administration and the US Congress in his final 17 months of office.

Referring to the latest Central American peace proposals, Mr Reagan steered a
middle course, endorsing the diplomatic efforts while pledging not to abandon
the Nicaraguan Contra rebels who, he said, were fighting for freedom.

For five months, Mr Reagan has stayed silent as the Iran-Contra scandal
dominated the headlines, helped by the televised Congressional questioning of
witnesses.

Last night, he struck a contrite, if folksy, tone: "At times I have been as mad
as a hairnet," he said.

Mr Reagan implicitly rebuked Mr John Poindexter, his former National Security
Adviser, for failing to inform him of the key cause of the scandal - a White
House scheme to divert money from secret US arms sales to Iran to the Contra
rebels, during a Congressional ban on US military aid to the Contras.

"I am the one who is ultimately accountable to the American people," he said.
"No president should ever be protected from the truth."

He avoided any direct answers to the lingering questions surrounding the affair,
such as the role of his former confidant, the now deceased Mr William Casey, who
was director of the Central Intelligence Agency.

He avoided harsh criticism of his two top aides, Mr Poindexter and Lt-Col Oliver
North, both of whom face possible criminal indictments.

However, he admitted more clearly than in his previous two nationwide addresses
on the Iran-Contra affair that he bore responsibility, by trading arms for US
hostages held by pro-Iranian guerrillas in Lebanon.

He struck a very personal note: "The image - the reality - of Americans in
chains, deprived of their freedom and families so far from home, burdened my
thoughts.  This was a mistake."

Looking ahead to the rest of his term in the White House, Mr Reagan said in his
speech from the Oval office that he wanted to be positive and productive.

"I am not about to let the dust and cobwebs settle on the furniture in this
office, or on me."

He addressed three main issues: the possibility of an agreement with the Soviet
Union to eliminate the superpowers' arsenal of nuclear medium-range and
shorter-range nuclear missiles; the nomination of the conservative judge, Mr
Robert Bork, to the Supreme Court; and the Central American peace process.

Mr Reagan adopted a cautious line on the prospects for peace in Central America,
notably in El Salvador and Nicaragua.

Turning to last week's tentative peace plan of the five Central American
political leaders in Guatemala City, President Reagan said he welcomed the
development.  However, he added an important caveat, saying that US support had
to be consistent "with the interests of democracy and those fighting for
freedom."

This was an explicit reference to the right-wing Contra rebels fighting the
left-wing Sandinista Government in Nicaragua.  Many conservatives, as well as
Vice-President George Bush, have voiced scepticism over last week's peace plan
from the Central American leaders, saying it abandons the Contra cause.

Mr Reagan, stressing the diplomatic route to peace said: "We've always been
willing to talk." But he added: "We have never been willing to abandon those who
are fighting for democracy and freedom."

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            August 14, 1987, Friday

Reagan Attacks Congress View On Trade And Budget

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 282 words


President Reagan yesterday attacked Congress for its trade and budget policies,
striking a confrontational tone which contrasted sharply with his sombre call on
Wednesday night for a renewal of trust between the Administration and the
legislature.

In a speech in the farmlands of Nebraska, Mr Reagan, who is about to begin a
three week holiday, turned away from the Iran-Contra scandal and blasted "those
in Washington who don't want to discipline themselves."

The President declared that he would veto any tax increase voted by the Democrat
majority in Congress and renewed his assault on "protectionists who tell US the
way to bring down the trade deficit is to raise barriers of our own."

On Wednesday night, in a nationwide televised speech from the Oval Office, Mr
Reagan, 76, had appeared contrite about his role in the Iran-Contra scandal,
even suggesting that a new spirit of co-operation between Congress and the
Administration "may be the eventual blessing in disguise."

Democrats reacting to Mr Reagan's speech, said they intended to drop the
Iran-Contra affair as a political issue and move on to other pressing foreign
and budget issues.

Senator George Mitchell, the Maine Democrat who impressed as a member of the
Joint Congressional inquiry into the affair, said in a televised reply to Mr
Reagan: "The major mistakes were in the policies themselves and the policies
were the President's." But he added: "We want to work with the President."

Three major political struggles are looming next month which will test whether
the President and Congress can co-operate: the trade bill, the budget deficit,
and the nomination of Judge Robert Bork to the supreme Court.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            August 14, 1987, Friday

Bewildered, Weary President Shows His Age

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 754 words

HIGHLIGHT:
The loss of public trust is at last turning Ronald Reagan's hair grey, writes
Lionel Barber


At the height of the televised Congressional hearings into the Iran-Contra
scandal, President Ronald Reagan promised to "stand on the roof and yell" about
his views on the scandal which shook his presidency to its core.

On Wednesday night, a weary-looking Mr Reagan stared into the teleprompter in
the Oval Office and declared in a live speech to the nation: "The fact of the
matter is that there's nothing I can say that will make the situation right.  I
was stubborn in my pursuit of a policy that went astray."

This was Mr Reagan's third attempt on television to explain why he authorised
the sale of arms to Iran in exchange for the release of American hostages in
Lebanon.  Not much was new.  The earlier defence that the policy was all about
broad strategic goals of cultivating moderate factions in Iran vanished - the
admission that the President let the lives of six American hostages, including
the CIA station chief in Beirut, dictate decision-making for 18 mad months was
at least explicit.

But as the last public witness in the affair which had dogged his presidency for
the last nine months, the President was a disappointment.  He shed no light on
many lingering questions.  He gave no explanation of why Rear Admiral John
Poindexter, his former National Security Adviser, took it upon himself to
authorise the diversion of several million dollars from the Iran arms sales to
the Nicaraguan Contra rebels during a Congressional ban on US military aid.

Mr Reagan also avoided any reference to the role of Mr William Casey, the former
CIA director and confidante of the President (though he may have felt
constrained by Mr Casey's death from cancer earlier this year).  Mr Reagan did
not amplify his previous off-the-cuff statement that he had heard no evidence of
criminal law-breaking during the Congressional hearings.

Instead, he confined himself to changes in people and procedures: a new team of
advisers, a ban on the National Security Council engaging in covert operations,
and new guidelines for notifying Congress about such operations.

The overwhelming impression was of a man still pained and bewildered by the
American public's refusal to believe his version of events.  Friends say this
loss of public trust has aged the 76-year-old President whose reddy-brown hair
is at last turning grey.  Judging form Wednesday night's croaky performance and
far from word perfect delivery this is true.

And yet, a dominant theme in the speech was an appeal for a renewal of trust,
not just between the President and his people but also between the
Administration and the US Congress.  Mr Reagan (or was it Mr Howard Baker, the
White House Chief of Staff?) is surely right when he says that much can be
achieved in the last 17 months of office in a spirit of co-operation with the
elected representatives.

When he spoke of the future, Mr Reagan appeared visibly at ease with himself.
An historic arms agreement with the Soviet Union to eliminate medium range
nuclear weapons is within reach, he declared.

"I am optimistic we'll soon witness a first in world history - the sight of two
countries actually destroying nuclear weapons in their arsenals.  Imagine where
that may lead."

He pledged, too, to fight for Judge Robert Bork, his conservative nominee for
the vacant seat on the US Supreme Court and urged the US Senate to come to a
swift confirmation vote.

On Central America, Mr Reagan struck a more equivocal stance.  While he said he
was "totally committed" to the Contra rebels and would not abandon them, he
repeated his qualified blessing to the diplomatic initiative agreed in Guatamala
City last week.

Conservatives such as Mr Jack Kemp are screaming "sell out" and even vice
President George Bush does not like the outline deal, but Mr Reagan held his
ground, specifically referring to the first steps towards bipartisanship with
Congress.

How sincere is Mr Reagan?  On the budget deficit, he was as stubborn as ever,
still appealing for a constitutional amendment to balance the budget and even
talking about a constitutional convention to enforce such a measure.  This is
not the stuff of which bipartisan co-operation is made, though at least Mr
Reagan had toned down the post Venice summit rhetoric.

In the last resort, Wednesday night's speech - notably its detached, uncurious
assessment of the Iran-Contra scandal - revealed that Mr Reagan is not about to
change the habits and attitudes of a lifetime.  At 76, it is simply too late and
too much to expect otherwise.

LANGUAGE: ENGLISH

GRAPHIC: Picture Ronald Reagan, no light on lingering questions

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                        Financial Times (London,England)

                            August 17, 1987, Monday

The Monday Page;
Back In The Black

BYLINE: Raymond Snoddy

SECTION: SECTION I; Pg. 8

LENGTH: 1810 words

HIGHLIGHT:
Conrad Black has returned the Daily Telegraph to profit.  Raymond Snoddy meets
the proprietor


Personal File.

1944 Born in Montreal, Quebec, educated in Carleton, Laval and McGill
universities.

1966 Entered newspaper business as chairman and co-proprietor of Eastern
Townships Publishing Company and La Societe de Publications de L'Avenir de
Brome-Mississquoi.

1977 Published 700 page biography of Maurise Duplessis, the controversial
premier of Quebec.

1978 Became president and chairman of the executive committee of the Argus
Corporation and through this, chairman of Massey Ferguson.

1980 Stood down as chairman of Massey.

1985 Paid 10 m Pounds (pds) for a 14 per cent stake in the Daily Telegraph.

1985 Took control of the Daily and Sunday Telegraphs; to become chairman in
September 1987.

Like most television stations and newspapers in the World the Daily Telegraph
had the habit of calling President Reagan's Iran-Contra troubles Irangate for
short.

It does not do so any more.

"I said we simply must not use the word Irangate.  It's a spurious and short
form of misinformation," said Mr Conrad Black, the proprietor of the Daily and
Sunday Telegraphs, who believes there is absolutely no comparison between the
illegalities of the Watergate scandal and Mr Reagan's mistake.

Mr Black is not the kind of newspaper owner who meddles in editorial content on
a daily basis or who believes that newspapers are the playthings of powerful
proprietors.  But neither is he the disinterested absentee landlord he appeared
to be when he first took a controlling interest in the Daily Telegraph in
December 1985.

"I don't feel it is appropriate for me to intervene very much in the coverage of
domestic (UK) affairs.  On coverage of foreign matters I have no such
compunction and I have made my views quite well known," says Black who is a
passionate believer in the Atlantic Alliance, an "enlightened conservative" and
an "unabashed and unambiguous" admirer of Mrs Margaret Thatcher.  He also thinks
that President Reagan is on balance an outstanding president, although a man of
uneven abilities.  When the Daily Telegraph carried a leader critical of the
American bombing of Libya, the proprietor through the position of editor, Mr Max
Hastings, was mistaken.

"What I told Max was that the leader and the piece by Ferdinand Mount beside it
were 'seriously falacious analyses of what really happened.' But I did not do it
in any way that was intimidating or restricting to them," he adds.

Conrad Black is emerging as one of that small band of international newspaper
publishers who can operate on both sides of the Atlantic.  He invites comparison
with his fellow citizen the late Lord Beaverbrook (legendary proprietor of the
Daily Express) and the late Lord Thomson (one time owner of the Times), who came
to Fleet Street in search of money, power and peerages.

Black says he recoils from Beaverbrook as a propagandist and to a lesser extent
from Lord Thomson - the total businessman, little interested in what went into
his papers - and adds that unlike them he is not looking for a peerage.

"I like London and am very pro-British, but I do not necessarily regard London
as the centre of the political and cultural world ...  I am not a seeker after
status here more than I already have through being the principal shareholder in
one of the country's important newspapers."

He may not be a Beaverbrook or a Thomson, yet the role of international
newspaper proprietor is clearly one that Conrad Black relishes.

A heavy physical presence exudes resolution and a stream of forceful opinions on
everything from Third World debt to 19th century British prime ministers.

Why does he so admire the British Prime Minister?  'I said to her the other day
I though the revolution she had wrought was more profound and beneficial by far
than the two episodes in British history that enjoy that description.  The
decapitation of Charles I and deposing of James II did practically nothing for
the economic life and work ethic of this country.  By bringing back the notion
that economic self-interest is something that is legitimate - and not something
to be smothered and exterminated by the nonconformist guilt complex and
conscience of this country - she is giving to effort of almost every kind what
is the surest incentive for it," says the man who has written a 700 page
biography of the Quebec Premier Maurice Duplessis.

Black has always been disgracefully precocious.  When he was eight he used his C
Dollars 60 savings to buy a single share in General Motor - a share he still
owns, although now it has grown to three through a three-for-one issue.

His father, George M Black, was president of a company called Canadian Breweries
(which became Carling O'Keefe) and a significant shareholder in the Argus
Corporation, the large Canadian holding company that his sons Conrad and Montagu
one day control.

With degrees in history from Carleton and McGill universities and a law degree
from Laval, Black is proud of having a foot in both the academic and business
camps.

At the age of 43, Black owns 75 per cent of assets he believes would be worth C
Dollars 650 m if sold and he has no sense of embarrassment about his wealth or
desire to live as anything other than the rich man he is: "It is after all my
money and I made it," he says.

Black formally dons the mantle of international newspaper proprietor next month
when he becomes chairman of the Daily Telegraph on the retirement of Lord
Hartwell.  In a neat coincidence of timing, September will also be the month
when the Telegraph moves into profit for the first time after two years - years
which took the newspaper perilously close to receivership.

The decline in circulation from more than 1.4 m in the 1970s has been arrested
at around 1.15 m, nearly 50 m pds a year has been cut from operating costs and
in the past few weeks the paper has left its old Fleet Street headquarters for
South Quay in London's Docklands.

By 1990, Mr Black believes the company should be aiming at pre-tax profits of 20
per cent.  He is also starting to think about the possibilities of regionally
modified editions of the paper "to give new meaning to the phrase national
newspaper."

Less than two years after he took control of the Telegraph with an investment of
about 30 m pds, it is looking like "an unusually opportune deal.

"It is an opportunity that no-one should expect to see come again because it is
such a unique newspaper franchise.  It is unarguably one of the world's great
newspaper franchises," said Black, whose business life began with a chain of
small Canadian newspapers which he still owns.

The Telegraph investment, he explains, was a calculated risk made before any
agreement had been decided with the print unions on new technology or more
efficient manning levels.

"I bet on Mrs Thatcher and on Mr Murdoch and they turned out not to be bad
people to bet on," he says.  Getting control of the Telegraph was Black's second
great business coup.  The first was in 1978 when he won control of the Argus
Corporation.

Both were institutions which had seen better days and were in the throes of
handing over from one generation to the next.

With the Telegraph, the key was making his 10 m pds (14 per cent) stake taken in
June 1985 conditional on being given first refusal on any future disposal of
shares.  The financial position of the company deteriorated with alarming speed
that summer, largely because of the huge burden of paying for new printing
centres in Manchester and London.

In December, Black saved the company with a 30 m pds package that included
subscribing for new shares and underwriting others.  In return he gained
control.

Taking over Argus had been more dramatic - Black and his associates managed to
win control with a borrowed C Dollars 10 m, because of faction fighting on the
board and the fact that the voting shares were concentrated in a few hands.

With control of Argus he gained about 14 per cent of participating equity of a
company that owned between 11 and 23 per cent in other companies - one of them
Massey Ferguson, the farm equipment company.

One by one the pieces of Argus were disposed of, often amid controversy.  Black
was accused of walking away from the problems of Massey Ferguson, by first
resigning as chairman after two years and then by giving the 16.3 per cent Argus
stake to two of the machinery company's Canadian pension funds "without
consideration."

The stake in Domtar, the Montreal forest products group, was disposed of as the
interest in Dominon stores.  The process was completed last year with the sale
of the 41 per cent Argus stake in Norcen Resources, the Calgary energy group,
for C Dollars 300 m.

It was, says Black, a painful process of tearing down and restructuring that did
not win instant popularity but he says he knew of no other way of getting from
where he started to where he is now.

"We all have to be economic Darwinists and we must temper that with as much
compassion as we can without the ship sinking through an excess of compassion,"
says Black, claiming that the shareholders did well out of the strategy and as
many jobs as possible were saved.

Now Black has "thrown down the mask" and Argus is nothing more than the ultimate
holding company for more than 50 newspapers in the US and Canada.

Black says he likes newspapers because they are businesses that are both
interesting and profitable and because they give access to everyone he wants to
meet.  He would like more of them.

There are plans to co-launch new English language dailies in Montreal and Ottowa
and research will be carried out to see if there are any potential newspaper
acquisitions in the UK.  But he is not competing in any frantic newspaper
acquisition race against Mr Rupert Murdoch or Mr Robert Maxwell.  Nor is he
pining for a career in politics on either side of the Atlantic.

"I do what I do and I think I get on reasonably well, but my greatest pleasure
beyond the satisfaction of basic appetites is to sit at home with my family and
my cats and read my books," says Black who is often portrayed as a brooding
figure addicted to hero worship of Napoleon and war games with toy soldiers in
the basement of his house.

"I do not in fact own one toy soldier and I never have," says Mr Black although
he has taken part in historic war games a couple of times at a friends house.

As he takes over the chair at the Daily Telegraph, Black has a clear vision of
where he wants to go that has little to do with cats, toy soldiers or Napoleon.

"I want to build a first-class international newspaper company and I think the
omens are favourable.  As a writer, I am gently approaching the task of some
sort of work on historical philosophy that is original and not superficial.
That may take a long time.  The mountain may not give birth but it will not give
birth to a mouse," says Conrad Black.

LANGUAGE: ENGLISH

GRAPHIC: Picture Ashley Ashwood

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                        Financial Times (London,England)

                            August 21, 1987, Friday

US 'Explored Pretoria Role In Nicaragua'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 212 words


The Reagan Administration explored the possibility of South Africa helping the
Nicaraguan Contra rebels but later rejected the idea, according to testimony by
a senior CIA official to the Iran-Contra select committee.

Mr Dewey Clarridge, a protege of the late CIA director, Mr William Casey, flew
to South Africa in April 1984 to hold talks with the Pretoria Government. But
the proposal was dropped, apparently because of a public furore about the CIA's
role in mining Nicaraguan harbours later that year.

It is unclear whether the Administration sounded out South Africa or vice versa.
The disclosure, which came in declassified documents made available by the
committee, illustrate how the Administration determined to keep the Contra cause
alive in the face of an impending Congressional ban on US military aid.

South Africa's apartheid policy has long been criticised in the US and this led
to limited US economic sanctions last year.

Mr Clarridge told the House-Senate panel that unidentified South African
contacts wanted to be paid for training and equipping the Contra rebels.

He added that they wanted to aid Central American countries rather than the
Contras themselves, but this, like much of Mr Clarridge's testimony, was met
with scepticism.

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                        Financial Times (London,England)

                            August 21, 1987, Friday

Irangate Documents

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 23 words


Switzerland's high court ruled that Swiss bank documents relating to the
Iran-Contra affair should be handed over to US investigators.

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                        Financial Times (London,England)

                            August 28, 1987, Friday

Clearer Path To A Summit

SECTION: SECTION I; Editorial; Pg. 12

LENGTH: 703 words


The offer by Mr Kohl, the West German Chancellor, ultimately to scrap Bonn's
ageing Pershing 1A missiles has removed the single biggest remaining obstacle to
an agreement between the US and the Soviet Union on the world-wide elimination
of intermediate-range nuclear forces.  Barring last-minute hitches - always a
possibility given the sensitive nature of arms control negotiations and the
whole superpower relationship - President Reagan's optimism that a deal can be
reached promptly appears to be justified.

The fundamental reasons for such optimism have long been evident, and have as
much to do with Soviet and American domestic politics as with a desire to rid
the world of nuclear weapons.  His reputation seriously damaged by the
Iran/Contra affair, President Reagan is anxious to bow out from the White House
with a resounding foreign policy success to his credit.  Mr Gorbachev, too, is
badly in need of a concrete achievement on the world stage to add substance to
his propaganda victories.  He has made no secret of his belief that his planned
economic reforms are heavily dependent on reducing expenditure on armaments.

Given these considerations, it was impossible that Mr Kohl and his conservative
supporters in the Bonn government could hold out for very long against the
combined forces of Washington and Moscow, backed by the chancellor's own
coalition partners.  Once the US and the Soviet Union had agreed on the
so-called "global double zero option" providing for the abolition of all nuclear
missiles with a range of between 500 km and 5,000 km, Bonn's insistence on
retaining its own 72 P1As, with a range of 720 km, became virtually untenable.
That was particularly true given the fact that their nuclear warheads remained
under US control.

The Nato argument that the missiles in question could not be included in a
bilateral US-Soviet agreement because they were "third country systems" always
appeared an over-legalistic interpretation of a problem which was one of
politics and strategy.  Having been dragged kicking and screaming into approving
the "double zero option," which they and other European members of Nato feared
might lead to the weakening of the US nuclear shield over Europe, the Germans
felt particularly vulnerable to the Warsaw Pact's superiority in conventional
forces.

The P1As, however out-of-date they might be, were at least a symbolic reminder
to Moscow that West Germany continued to have a medium-range nuclear capability
in the event of a Warsaw Pact attack.  Though unconvinced of the P1As military
value, Washington and other Nato allies were unwilling to alienate Bonn any more
than they had done already.  Mr Kohl's conversion to arms control orthodoxy has
been achieved only progressively through discreet behind-the-scenes pressure and
the exigencies of his own domestic political situation.

Even now, the principle that third country systems cannot be included in any
US-Soviet deal has been respected by Mr Kohl's proposed formula.  The Pershing
1As would only be scrapped once the US and Soviet Union had fully implemented
their treaty on the abolition of medium-range missiles.

Though the path to an INF agreement and, possibly a Reagan-Gorbachev summit, now
appears to have been cleared, the issues raised by the German missiles affair
have not been solved by any means.  Not only Bonn, but Paris and London, have
been made acutely aware of the strategic gap in Europe's defences which will be
left by the abolition of ground-launched Cruise and Pershings.  That feeling has
been reinforced by the absence of any really significant progress in other
disarmament negotiations on strategic nuclear weapons and conventional forces.

The optimistic view is that the improved atmosphere resulting from an INF
agreement will facilitate progress in other areas of arms control, but that
control cannot be taken for granted.  Long before other and even more important
arms reductions are agreed, the Western alliance, and its European members in
particular, will have to decide how to adapt its defence strategy to the new
situation.  Ironically, the departure of Cruise and Pershings may cause as many
problems as their controversial arrival.

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                        Financial Times (London,England)

                            August 28, 1987, Friday

Poindexter To Retire

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 37 words


Rear Admiral John P Poindexter, the former national security adviser who
resigned after the Iran-Contra scandal broke, has submitted a request to retire
from the Navy this autumn, Pentagon officials said yesterday.

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                        Financial Times (London,England)

                          September 9, 1987, Wednesday

Reagan Avoids Clash On Bork Nomination

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 388 words


President Ronald Reagan, facing the challenge of trying to rally political
support in the wake of the debilitating controversy over the Iran-Contra arms
deals, put the looming battle over his nomination of Judge Robert Bork to the
Supreme Court at the top of his agenda in a speech to Administration officials
yesterday.

But Mr Reagan, following the White House strategy of trying to prevent opponents
of the conservative Judge Bork from successfully portraying him as a political
extremist, avoided a confrontational tone on this and other issues with which
Congress must deal in what promises to be one of the busiest congressional
sessions of the presidency.

Mr Marlin Fitzwater, the White House spokesman, yesterday dismissed reports that
disgruntled conservatives in the Administration were deeply disturbed about the
thrust of Administration policy in Central America and the prospects for
securing from Congress renewed aid for the Contra rebels.  He suggested that the
reports did not reflect the views of the President and his top officials.

While reiterating the Administration view that "the real issue" so far as
Nicaragua is concerned is "peace and democracy in Central America and the
national security of the US," Mr Fitzwater stressed that the President is
committed to the peace process under way in Central America and is working with
Mr Jim Wright, the Democratic Speaker of the House, on US policy there.

Congress reconvenes after the four-week summer holiday today.  The Democrats,
who are in control of both the Senate and the House, are determined to build on
what they see as their success in keeping the President on the defensive so far
in 1987.

They are aware that some of Mr Reagan's Republican supporters have been urging
the weakened President to be more pragmatic in his dealings with the Democratic
leadership and more conscious of the importance of building support for
Republican positions as next year's presidential and congressional elections
approach.

One unresolved issue is the final shape of the federal budget for 1988.  Even
though the next fiscal year begins on October 1, the federal government's
authority to borrow expires on September 23 and the budget deficit is widely
expected to begin rising again towards Dollars 200 bn in 1989 after a sharp fall
this year.

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                        Financial Times (London,England)

                           September 11, 1987, Friday

White House To Seek Dollars 270 M In Aid For Contras

BYLINE: Nancy Dunne, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 409 words


Mr George Shultz, the US Secretary of State, yesterday pledged intensive
diplomatic support for the Central American peace agreement but told Congress
the administration would, in any case, seek an additional Dollars 270 m over 18
months in aid for the Nicaraguan Contra rebels.

In a wide-ranging review of the administration's position on Nicaraguan peace
efforts before the Senate foreign relations committee, Mr Shultz praised the
substance of the Central American peace plan, calling it a good framework,
which, however, left "some vital things" vague and failed to deal with some of
the US's security concerns.

By implication he gave US policies much of the credit for the plan, saying Mr
Daniel Ortega, the Nicaraguan President, had been pressured to sign by the
"increasing success" of the Contras and the bi-partisan peace plan offered by
President Ronald Reagan and Mr Jim Wright, the House of Representatives Speaker.

On the diplomatic front, Mr Shultz promised the US would work to strengthen the
plan, and he announced that the President would appoint Mr Morris Busby, the
Deputy Assistant Secretary of State, to be roving ambassador to Central America
to co-ordinate the efforts of chiefs-of-mission in each country.

President Reagan has also selected a nominee as ambassador to Nicaragua, a
career foreign service officer, whose name has not yet been made public, he
said.  In addition, he is nominating Mr Deane Hinton, former ambassador to El
Salvador and Pakistan, to be ambassador of Costa Rica.

Mr Shultz said the President viewed the new aid request "as a constructive force
for peace" because it would continue to put pressure on the Nicaraguan
Government to abide by its commitments under the peace plan.

Speaking to a Congress already cynical about Nicaraguan aid in the wake of the
Iran/Contra affair, the secretary stressed the bi-partisan efforts of the past.
He urged Congress "to end the doubt and uncertainty about the capacity and
commitment of the US that is created by the recurring cycle of off-again,
on-again aid decisions punctuated by protracted and divisive debate."

The new aid, he said, "is what the resistance needs - for training, equipment
and other support." However, he seemed to imply, during the senators'
questioning, that the administration would be willing to use the funds for
economic and development assistance to Nicaragua if promises by Mr Ortega to
"democratise" were fulfilled.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          September 15, 1987, Tuesday

US Tables Fresh Arms Proposals On Eve Of Talks

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 506 words


The US has formally presented detailed proposals for the global elimination of
longer and shorter range nuclear missiles to the Soviet Union at the arms talks
in Geneva, President Ronald Reagan announced yesterday.

'It is up to the Soviet Union now to demonstrate whether it shares our
determination to conclude a treaty eliminating all US and Soviet intermediate
nuclear forces (INF) missiles,' Mr Reagan said.

The move came on the even of a crucial round of talks which Mr Reagan and Mr
George Shultz, his Secretary of State, will begin today with Mr Eduard
Shevardnadze, the Soviet Foreign Minister.

Mr Reagan said the formal US proposals called for the elimination of longer
range missiles, which can travel 600 to 3,000 miles, within three years and
elimination of shorter range weapons, which can travel 300 to 600 miles, within
a year.

Mr Shevardnadze is scheduled to begin the talks this morning at the State
Department when he and Mr Shultz are due to sign a US/Soviet agreement for the
establishment of nuclear risk reduction centres designed to allow the two
countries to exchange information and data to reduce the danger from nuclear
accidents.  He will later meet Mr Reagan.

On his arrival in Washington on Sunday Mr Shevardnadze disclosed he had brought
a letter for President Reagan from Mr Mikhail Gorbachev, the Soviet leader.

Commenting on whether the talks would lay the foundation for a Reagan/Gorbachev
summit in Washington later this year, Mr Shevardnadze said that would 'depend on
the results of our work here,' Mr Gorbachev has insisted he will not come to
Washington unless an arms control accord can be signed.

The White House sees the conclusion of an arms control accord with Moscow as a
major political opportunity which would help Mr Reagan put the adverse impact of
the Iran/Contra arms scandal behind him and provide him with the clear-cut
foreign policy success which has so far eluded him.

Arms control experts on Capitol Hill are already saying the prospects of an
accord are helping the President in his battles with Congressional liberals who
are critical of his defence and strategic policies.

But Administration officials who have been torn between playing down
expectations of this week's talks and trumpeting the accord which seems to be
within their grasp, were yesterday insisting awkward details remained to be
resolved.

US officials said yesterday the proposal presented in Geneva followed
discussions with US allies about the detailed verification provisions; when for
example inspections to establish that a treaty is being properly implemented can
be carried out and for how many years.

One official said other issues relating to how the elimination of each side's
missiles should be phased in, given that Moscow has more missiles to eliminate
than the US, and over what period, also need to be resolved.  The Soviet Union
the official said, is looking for a five year period for the elimination of
longer range missiles, not the three years the US is talking about.

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                        Financial Times (London,England)

                           September 18, 1987, Friday

US, Soviets Agree To Begin Talks On Nuclear Testing

BYLINE: Robert Mauthner, Stewart Fleming, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 671 words


The US and the Soviet Union yesterday reached agreement to begin full-scale
negotiations on nuclear testing before December 1 this year.

The announcement was made jointly by the US State Department and the Soviet
Foreign Ministry as talks by the respective foreign ministers Mr George Shultz
and Mr Eduard Shevardnadze on an intermediate range nuclear forces (INF)
agreement were unexpectedly extended into the evening.

Their three-day meeting, which was originally scheduled to end at lunchtime, was
clearly prolonged because Mr Shultz and Mr Shevardnadze felt that they should
take advantage of the progress they made.

"They are moving ahead on a whole range of issues," Mr Charles Redman, the State
Department spokesman, said.  Mr Gennady Gerasimov, the Soviet spokesman, was
even more optimistic, remarking: "History is in the making."

The joint statement on nuclear testing said that the "ultimate objective" of the
negotiations was "the complete cessation of nuclear testing as part of an
effective disarmament process."

As a first step, the two sides would agree on effective verification measures
for two unratified agreements, limiting the magnitude of nuclear tests - the
US-Soviet threshold test ban treaty of 1974 and the peaceful nuclear explosions
treaty of 1976.

Mr Gerasimov said that the two sides intended to design and conduct joint
verification experiments at each other's test sites.  These measures would be
used as appropriate, in further nuclear test limitation agreements which might
subsequently be reached.

The announcement of the agreement to start negotiations on nuclear testing was
intended to convey the fact that the ministers were continuing to make headway
in their extended talks.

All the signs were that the ministers had made better progress than had been
expected and that they hoped to reach a broad agreement on the abolition of
medium-range missiles worldwide.

Such an accord would be the first arms control agreement between the US and the
Soviet Union since the conclusion of the SALT 2 agreement of 1979 on limiting
strategic nuclear weapons.

It was still uncertain, however, whether a date would be made public at this
juncture for a summit meeting between President Reagan and Mr Mikhail Gorbachev,
the Soviet leader, at which an agreement on the abolition of intermediate range
nuclear forces would be signed.  It is more likely to be announced during the
meeting next week of the United Nations General Assembly in New York.

The ministers began the last day of their meeting in a relaxed frame of mind.
Mr Shultz said that he and his Soviet colleague had had "a lot of good
discussions" of the proposed INF agreement and other issues on the agenda.

These included a proposed agreement on reductions of long-range strategic
nuclear arms, limiting nuclear tests, a proposed ban on chemical weapons, human
rights problems and regional issues such as Afghanistan and the Gulf.

The White House has seen an intermediate range arms accord with Moscow as one
way of boosting the President's prestige in the wake of the Iran-Contra affair.
Public opinion polls show that US voters favour arms control agreements with
Moscow.

However, Mr Reagan yesterday suffered a setback to his arms control strategy
when the Senate gave preliminary approval to a provision in the defence
authorisation bill withholding funds for the testing and development of
space-based weapons which violated the original interpretation of the 1972
Anti-Ballistic Missile Treaty.

The Administration, in the face of opposition from Senator Sam Nunn, the
powerful Democrat, has been insisting that a broader interpretation of the ABM
treaty - giving greater freedom to test elements of a strategic defence system -
is permissible.

The Soviet Union, seeking to curb the development of the Strategic Defence
Initiative has linked progress in the negotiations on reducing the number of
strategic missiles.

Mr Reagan could still try to protect his stance on SDI by vetoing the defence
bill.

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                        Financial Times (London,England)

                           September 18, 1987, Friday

Reagan Hails Constitution Amid Showbiz Pageantry

BYLINE: Lionel Barber, Philadelphia

SECTION: SECTION I; American News; Pg. 5

LENGTH: 388 words


President Reagan yesterday celebrated the 200th anniversary of the US
constitution, declaring that it was America's solemn duty to spread its
principles of freedom and limited government to the rest of mankind.

In a speech in front of Independence Hall in Philadelphia, where the Founding
Fathers gathered 200 years ago to debate and sign the constitution, Mr Reagan
spoke with missionary zeal about his country's calling in the world.

"The guiding hand of Providence did not create this new nation of America for
ourselves alone, but for a higher cause - the preservation and extension of the
sacred fire of human liberty.  That is America's solemn duty," the 76-year-old
President said.

High above, seven white balloons marked "Stop Aid" hovered in the rain, a
reminder that some Americans were ready on this anniversary day to exercise
their First Amendment rights to oppose the US-backed rebels in Nicaragua.

Yesterday brought to a climax months of national celebrations of the
constitution which have also been mixed with debate among scholars about whether
the original four-page document meets the needs of the modern US state.

Some 32 states have called for a constitutional amendment to require a balancedd
federal budget.  President Reagan himself has called for an economic Bill of
Rights, but two more state signatures are needed to reconvene a convention, and
over the years the constitution has proved remarkably resilient.

This year has seen the constitution in dramatic use - the summer congressional
inquiry into the Iran-Contra affair and, this week, Senate scrutiny of President
Reagan's conservative nominee for the US Supreme Court, Judge Robert Bork.

In his speech yesterday Mr Reagan gave a plug to the hard-pressed judge and
later, at a Republican fund-raiser, singled out Senator Arlen Spector of
Pennsylvania for special praise.  Senator Spector holds a crucial vote on the
divided Senate judiciary committee considering the Bork nomination.

Politics aside, yesterday's pageant contained a healthy dose of American
show-biz, featuring three 15 ft motorised robots, Dennis Connors' winning
America's Cup yacht, a 16-member synchronised briefcase drill team composed of
dancing California bankers and lawyers, and a chunky looking Joe Frazier, the
former heavy-weight boxing champion.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          September 29, 1987, Tuesday

Widow Denies Casey Made Contra Arms Confession

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 455 words


The widow of Mr William Casey, the former Central Intelligence Agency director,
has become embroiled in a row over whether Mr Bob Woodward, the Watergate
reporter, obtained a death-bed confession from her husband on his role in the
Iran-Contra affair.

Mrs Sophia Casey described Mr Woodward's account of a covert visit this year to
the spy chief, in hospital, as "lies." Mr Woodward stood by his story yesterday,
and so earned more publicity for his forthcoming book, Veil, billed as the
inside guide to Mr Casey's years at the CIA, from 1981-87.

The book by Mr Woodward, who helped bring down President Richard Nixon over his
role in Watergate, is his fifth since All The President's Men.  Veil is not due
to come out until October 9 but front-page instalments in the Washington Post,
and Newsweek, plus syndicated extracts and a slot in CBS's prime-time programme
Sixty Minutes are likely to lift the book into the Top Ten Best Sellers' list.
There has been a first print-run of 500,000 by publishers Simon Shuster, and a
Dollars 1 m-plus advance for Mr Woodward.

It is still unclear, however, whether the book discloses sufficient new and
controversial material to have a lasting political impact.

Mr Woodward claims in his book that Mr Casey confessed that he knew about the
diversion of funds from secret US arms sales to Iran to the Nicaraguan Contra
rebels during a 1984-86 Congressional ban on US military aid.  By his account,
Mr Woodward evaded CIA security and visited Mr Casey, who had brain cancer.
During a four-minute conversation, he asked Mr Casey why he authorised the
controversial diversion.  "I believed," the spy chief whispered.

These enigmatic last words are nor sufficient proof that Mr Casey played a key
role in Iran-Contra.  They are unlikely to influence the content of the
Congressional report into the affair, which is also expected to be published
next month.

The book's other main disclosure concerns Mr Casey's role in the attempted
assassination of Sheikh Fadlallah, leader of the Hizbollah militant Shia
faction, who had been linked to three bombings of American locations in Beirut.

A CIA-trained unit detonated a car bomb in March 1985 which killed 80 people,
and the operation was plotted by Mr Casey and Prince Bandar, Saudi Ambassador to
the US, the book claims.

Mrs Casey, it seems, is more unhappy about the book's account of her husband's
relationship with President Reagan.  Over the weekend, she called reports that
the CIA chief criticised Mr Reagan as lazy and distracted as "absolute
blasphemy."

"My husband loved the President," she said.

An intriguing question is why Mr Casey, the ultimate insider, chose to be
inverviewed on 48 occasions by Mr Woodward.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              172 of 614 DOCUMENTS

                        Financial Times (London,England)

                         September 30, 1987, Wednesday

When The Package Comes Unstuck

BYLINE: Stewart Fleming

SECTION: SECTION I; Pg. 25

LENGTH: 1251 words

HIGHLIGHT:
Stewart Fleming looks behind the downfall of two US presidential candidates


A common thread links the failed presidential campaigns of senators Gary Hart
and Joe Biden - it is the brooding figure of the brilliant but mercurial
political consultant, Patrick Caddell, whom some leading Democrats describe as
the Rasputin of their party.

In 1984 Mr Caddell's vision of a campaign focused on recruiting the "baby boom"
generation to Gary Hart's cause nearly enabling the senator to snatch the
Democratic Party's presidential nomination from the grasp of former
Vice-President Walter Mondale, the candidate of the traditional party interest
groups.

Before turning to Mr Hart, the bearded political consultant had tried
unsucessfully to persuade Senator Biden to enter the race as the champion of the
"yuppie" generation.

Senator Biden, no doubt congratulating himself on the wisdom of his decision not
to run against President Ronald Reagan in 1984, was ready to go in 1987.  With
Mr Caddell, who had left the Hart camp, as one of his team of political advisers
and with the pollsters' themes of young and idealism as the leitmoitv of his
campaign, Senator Biden got off to a quick start.

But it is more than mere coincidence that the two candidates who had most
recently adopted Mr Caddell's approach should be the first to see their
presidential ambitions in ruins?  In one sense, what has happened to Senator
Biden and former Senator Hart is no accident.

In a parliamentary system of government, years of living cheek by jowl with
their peers gives party members the information on which to base a choice of
leader.  In the US, the protracted presidential primary and caucus process,
through which both parties select their standard bearers, is designed to winnow
out the weaker candidates.

US electoral history is full of examples of presidential candidates who have
seen their fates decided not by voters, but by what their admirers and
supporters dismiss as trival, unfair or malicious "accidents" which their
critics portray as pentrating insights into the qualities of the candidate.

A simple question: "Why do you want to President?" and his inability to answer
it in a television interview was arguably the turning point in Senator Edward
Kennedy's challenge to President Jimmy Carter in 1980.

So it is not surprising that Mr Hart, who had presented himself to the public
this year as a loyal family man, should have fallen amid allegations (which he
denied) that he had spent a night with a young women while away from his wife.

Nor is it surprising that Senator Biden, who was presenting himself as
visionary, orator and spokesman for youthful idealism, should be unseated by
evidence that he or his advisers were filching some of this best lines from
British labour leader Neil Kinnock, Robert Kennedy and even his rival, the Rev
Jesse Jackson, and that his passion could translate into public tantrums, laced
with ill-judged misrepresentations of his academic record.

For both men, the events raised question marks over the authenticity of their
convictions.  Competence and authenticity are qualities which, the polls
suggest, voters will be looking for in 1988.

Some trace this more critical attitude to public disillusion following the
unmasking of other public figures, notably President Reagan, as a result of the
Iran/Contra affair; some to the Jim and Tammy Bakker scandal which exposed the
television evangelist and his wife as charlatans.  Others see it as a sign that
more serious, political issues have failed to emerge.

There may, however, be more to it than this.  Could it be that the generation
which has grown up with television, and has learned to distrust the messages
with which the image-packagers bombard them, is also struggling to look beyond
the packaging of candidates by their political consultants?

"The voters are trying to get behind the TV image and get a real sense of who
the candidate is," maintains Kirk O'Donnell, president of a Democrat think tank
- the Centre for National Policy.

It is more than just the voters who are trying to get behind the packaging.  The
media, tortured and still agonising over the skilful manipulative practices of
politicians, particularly President Reagan, is in no mood to indulge political
candidates caught with their images down.

Seen from this perspective, Mr Caddell's role in the 1984 campaign, which made
Mr Hart the early front-runner for 1988, and in Senator Biden's effort this year
may indeed be significant.

His bid to shape two very different people into presidential candidates with the
same message - designed to fit a marketing niche which his polls had detected in
the nation's political culture - may have exposed the limits to which
candidate-packaging can be pushed.

It may be harsh to suggest that Mr Hart and Senator Biden are not sufficiently
substantial figures to be running for the Presidency.  But that is the charge
being made, particularly by some on Capitol Hill who know them well and who
early on identified weaknesses which were to play a part in their downfall.

In Senator Biden's case it was the ubiquity of the television cameras, the
medium which campaigners depend upon to build their candidates' image, which
made the biggest contribution to his downfall.

There is no doubt, however, that "dirty" political tricks were involved.
Somebody prepared and distributed to the press a so-called "attack video" of
Senator Biden using Neil Kinnock's lines.  The juxtaposition of Senator Biden's
pale replication with Mr Kinnock's passionate performance proved devastating.

The way in which their campaigns disintegrated may also be significant.  It
carries a message about the practicality of the tactic of appealing to the
maturing baby-boom generation.  "The generation concept is not a political
constituency," says one Democratic Party strategist.

Lacking, as Senator Biden and Mr Hart did, vigorous support among traditional
Democratic constituencies because of their rejection of interest-group politics,
they also lacked the leadership of powerful opinion leaders when trouble struck.

The long-term significance of the failure of the Hart and Biden candidates is
being mulled over by those remaining in the race.

One concern is that the disintegration of two campaigns harms the image of the
Democratic Party.  "It is damaging in the sense that it reinforces the
impression that we have too many insubstantial figures, raising the question
"why aren't the Democrats putting up their best candidates?" says a party
worker.

The remaining candidates in both parties are now on notice that their careless
mistakes are more likely, in the video age, to haunt them - and, if image and
reality clash, may prove fatal to their chances.  For example, on the Republican
side, Senator Robert Dole may have to be even more careful not to indulge his
biting wit.

Pat Schroeder's decision not to enter the lists reflects, in part, her concern
about how constantly having to play to the media would force her to adopt a
style of campaigning which would damage, not help, her candidacy.  "I could not
bear to turn every human contact into a photo opportunity," she says.

"The circumstances surrounding the withdrawal of Hart and Biden reinforce the
focus on the candidates as people," says one party analyst.  Does it open up the
way for new entrants?  Not necessarily.  "Unless you have some compelling theme
or rationale, there is no added incentive.  You cannot just get in because you
think you are as qualified as those who are already there."

LANGUAGE: ENGLISH

GRAPHIC: Picture, no caption; Picture Democrats Joe Biden and Gary Hart, no
longer in the Presidential race

                   Copyright 1987 The Financial Times Limited


                              173 of 614 DOCUMENTS

                        Financial Times (London,England)

                           October 7, 1987, Wednesday

Reagan Suffers Snub On Bork

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 384 words


The Senate Judiciary Committee last night dealt a sharp blow to President Ronald
Reagan's prospects of securing the appointment to the US Supreme Court of Judge
Robert Bork, an outspoken conservative.

In a 9-5 decision, with one Republican joining the eight Democrats, the
committee voted to send the nomination to the floor of the Senate with a
recommendation that it be rejected.

The vote provided a further signal of the growing opposition to Judge Bork's
appointment.  This leaves the White House facing seemingly equally unpalatable
alternatives - either withdrawing the nomination and proposing another nominee
or continuing to fight what is increasingly being seen by both Democrats and
Republicans, as an almost hopeless cause.

Senator Joseph Biden, the Democrat chairman of the Judiciary Committee, echoed
conventional wisdom in Washington last night when, in the wake of the vote, he
said there was "no reasonable prospect" of Judge Bork's nomination being
approved by the Senate.

But President Reagan stressed his determination to continue the fight: "I am
saying I am not going to withdraw his nomination," he insisted shortly after the
committe vote.

If Mr Reagan does not change his mind and if Judge Bork is rejected by the full
Senate in a vote possibly next week, it would represent a humiliating personal
and political defeat.

Mr Reagan has been vigourously appointing conservatives to both the federal
courts and, when opportunities have arisen, to the Supreme Court.  His policy is
designed to try to ensure that his conservative political philosophy lives on
after he leaves office in January 1989.

The nomination of Judge Bork was seen as particularly crucial.  An articulate
and erudite conservative, he is seen by his backers as the individual whose
appointment would finally create the five-person conservative majority on the
nine-member Supreme Court necessary to begin to chip away at judicial decisions
which conservatives abhore, including the 1973 Supreme Court ruling that
abortions are constitutional.

For President Reagan, a victory in the Bork nomination would have been presented
as further evidence of his political rehabilitation after the set backs of the
past year, notably over the Iran/contra affair, and the Republicans' loss of
Senate control.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              174 of 614 DOCUMENTS

                        Financial Times (London,England)

                           October 10, 1987, Saturday

Wellsprings Of Bad Blood Imperil US And Iran

BYLINE: Andrew Gowers, Dubai

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 750 words

HIGHLIGHT:
FT correspondents assess the Gulf situation, as seen from the hazardous waters
themselves and from the US capital


At last, after all the warnings and threats, the worst may have begun to happen
in the Gulf.  The clash on Thursday night between US and Iranian forces may have
locked Tehran and Washington onto a collision course, deviation from which both
sides may find very difficult.

The US Defence Department claims that its helicopter gunships sank three Iranian
speedboats in self-defence, after a US surveillance helicopter had been fired at
in the northern Gulf.  The Iranian reaction has been predictably fierce - just
as fierce as the threats of retributuion from Tehran more than two weeks ago,
after the Americans had attacked and seized an Iranian vessel which they say
they had caught laying mines.

Iran has shown much reluctance to undertake a showdown with Western naval forces
so far.  Mr Ali Akbar Hashemi Rafsanjani, speaker of the Iranian parliament, was
congratulating himself recently on Iran's restraint.

In the next few days, however, the force of the revolutionary regime's rhetoric,
if nothing else, is almost bound to create political pressure within Iran for a
bolder response.

No-one in Washington can pretend he was not warned that something like this
might transpire as a result of the huge US military build-up in and near the
Gulf during the last few months.  It now involves nearly 30 warships.  Apart
from the Iranian objections, deep misgivings about Reagan administration policy
in the region have been expressed among the governments of western Europe, in
some of the Gulf states, in the US Congress and of course in the Soviet Union,
which has called repeatedly for the withdrawal of all foreign navies in favour
of a force under the UN flag.

Worries were expressed about what many observers, including some loyal Republicn
congressmen, saw as a dangerous confusion at the heart of the US drive to step
up involvement in the Gulf, which began in early summer after Kuwait's request
to place half its oil tanker fleet under the US flag and the Iraqi attack on the
US frigate Stark.

The policy was ostensibly aimed to preserve freedom of navigation against what
was claimed to be an Iranian threat, yet experts were quick to point out that
Iran needs freedom of navigation more than any other state to maintain its vital
oil exports.

Also, the US policy was said to be designed to counter Soviet expansionism in
the Gulf, yet there were those in Europe who argued that US and Soviet interests
coincided to a remarkable extent over the Iran-Iraq war.  It was supposed to
reassure moderate Arab states of US support and steadfastness after the
embarrassments of the Iran-Contra arms scandal, yet some Gulf Arab governments
worry that it may result in a much more humiliating retreat by Washington - akin
to its withdrawal from Beirut after the bombing of the US Marine barracks there
four years ago.

In recent weeks, it may be argued, the picture has become somewhat clearer, in
that US Navy has obviously been trying to contain Iran in the Gulf after
Tehran's persistent refusal to accept the UN Security Council's call for a
ceasefire.  Even so, there was always a latent risk that containment could
swiftly, accidently, turn ito confrontation.

That seems all the more dangerous, diplomatic efforts at the UN to end the
Iran-Iraq war seeming to have all but run out of steam.  Ambassadors in new York
were discussing yesterday another proposed formula from Britain, designed to
bring Iran into serious negotiations on a ceasefire and an inquiry into the
origins of the conflict.  There was little hope, though, that it would succeed.
West and East now seem profoundly divided about what to do next.

For all that, there is a deeper wellspring to the events of this week.  It can
be traced back to the Iranian revolution and the overthrow of that key US ally,
the Shah, in early 1979.  As a result of all the humiliations which Iran's
Islamic republic has heaped on what it calls "the Great Satan" over the years -
from the seizure of the US embassy in Tehran to the kidnapping of American
citizens by Iranian proxies in Lebanon - analysts in Washington say there are
those in Government who would welcome the chance to settle scores with Iran.
Despite repeated US avowals of neutrality in the Gulf war, there has been an
obvious tilt in US policy towards Iraq this year.

"It is difficut for any US Government to look at Iran in a rational way," said
one leading US expert on the Middle East at a recent conference in Britain.
"There's blood between us."

LANGUAGE: ENGLISH

GRAPHIC: Picture Speaker Rafsanjani

                   Copyright 1987 The Financial Times Limited


                              175 of 614 DOCUMENTS

                        Financial Times (London,England)

                           October 13, 1987, Tuesday

Bush Struggles To Shake Off The Wimp Factor

BYLINE: Stewart Fleming

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1073 words

HIGHLIGHT:
As Vice-president George Bush launches his presidential campaign, Stewart
Fleming analyses his prospects


Wimp is not a word which you will find in most dictionaries but its meaning is
well understood by Americans.  It is a label which has stuck to Vice President
George Bush and which political strategists believe he must lose if he is to
achieve his lifelong ambition and follow President Ronald Reagan into the White
House.

The latest evidence to support this contention surfaced over the weekend in the
results of a Newsweek magazine presidential preference poll.

The poll takers had asked whether the "wimp factor" - the public image Vice
President Bush projects of being gutless and weak even when he tries to appear
forceful and decisive - is a serious problem.

Fifty one per cent of those polled said "Yes" - a liability indeed for the
63-year-old Vice President who yesterday travelled to his political home in
Houston, Texas, to announce formally that he is a candidate in the 1988
presidential election.

It is an odd characteristic of the campaign for the 1988 Republican presidential
nomination that of the two front runners, Vice-President Bush is widely
perceived to be too nice to be President and the other, Senator Bob Dole, too
malicious and nasty.

Many Americans would side to go back 150 years, to Vice-President Martin Van
Buren, to discover a vice-president who was elected to the presidency from that
position.  No accident either that in modern with Senator Dole, who clearly
believes that when it comes to presidential politics "nice guys finish last."

But why has the vice-president - a man who as a World War II bomber pilot was by
the age of 20 a certified war-hero - been tagged as weak?

In part it has to do with his background - what Alabama Governor Bill Baxley
reportedly described as a "a pin stripin' polo-playin', umbrella totin' Ivy
Leaguer born with a silver spoon so far back in his mouth that you couldn't get
it out with a crow-bar."

But it also reflects the interaction of his upbringing with the role he has been
playing for the past seven years as vice-president.  It is a job which demands a
degree of self effacement and loyalty to the Commander in Chief and President
that comes all to easily to a man brought up to believe that fairness, modesty
and loyalty are virtues to be prized.

So easily do these virtues come that wisecracks about Vice President Bush
reminding every American woman of her first husband and having put his manhood
into a blind trust have become common currency.  It was Mr Morton Kondrake, a
columnist for the New Republic magazine, who recently described the vice
presidency as "the Great Emasculator."

It is no accident that you have times only President Nixon made the leap, and
then only after an eight year wait while Vice-Presidents Hubert Humphrey, Gerald
Ford and Walter Mondale were all deafeated when they tried.

George Herbert Walker Bush was born into the American squirearchy.  His father
was a banker at Brown, Brothers and Harriman in New York.  On his mother's side
of the family, his grandfather George Herbert Walker was a wealthy southern
plantation owner and businessman in St Louis and donor of the Walker Cup, the
British-American amateur golf competition.

Vice President Bush graduated from Phillips Academy in Andover, one of America's
most celebrated private schools and Yale university.  Displaying the streat of
independence and determination which his friends say (along with his war record)
is public proof that the "wimp factor" is a figment of the media's imagination,
he did not follow his father's footsteps and become a Wall Street financier but
moved to Texas and built his own oil interests, co-founding Zapata Petroleum.

His political career began in 1966 when he served the first of two terms in the
House of Representatives.  In 1970 and 1972 he failed in two attempts to win a
Texas Senate seat.  He then began a 15-year period of public service which his
admirers say make him the best qualified of the 1988 pack of presidential
aspirants and his critics charge prove that his resume is based on political
preferment no political savvy.

Before being humbled by Ronald Reagan in the 1980 race for the Republican Party
nomination, Mr Bush served as chief US delegate to the United Nations as a Nixon
appointee, chairman of the Republican National Committee during the Watergate
period, ambassador to China and director of the Central Intelligence Agency
under President Ford.  Since 1977 he has been in single pursuit of the
presidency.

Today he is unquestionably the best organised, best financed, best known
candidate.  The latest polls show him leading Senator Dole by around 40 per cent
to 24 per cent among voters inclined to vote Republican.

By late summer he had raised some Dollars 10 m to finance his campaign.  That,
coupled with the organising effort he has made in key states could well keep him
in the race even if he does not win a top place in the early trials of strength
in Iowa and New Hampshire in February of next year.

Although like all the other Republican candidates he is presenting himself as
the natural inheritor of the Reagan mantle, and running on the Reagan record (a
sound enough strategy while the economy is running well and talks with Moscow
progressing) the activist conservative wing of the Republican Party distrusts
him.

The man who in 1980 criticised Mr Reagan's economic policy platform as "voodoo
economics," who expresses reservations about early deployment of the Strategic
Defence Initiative and whose wooing of the right wing has been described as "a
thin tinny 'arf" - the sound of a lap dog - not providing the ideological right
with the rhetorical red meat it expects, and which it got from Mr Reagan.

Mr Bush would be in a better position to risk offending an embattled Republican
right if he could appeal strongly to middle America.  But that too is proving
difficult.  While it is true that he surprised many of his critics by emerging
unscathed from the Iran/Contra scandal, the fact that he appears to have played
no significant role in the various covert operations which were run out of the
White House is now being cited as evidence of his peripheral role in
Administration policy making.

The smart money today says that Mr Bush will be another candidate who succumbs
to the curse that hangs over the ambitions of vice-presidents and which ensures
that for every ounce of political strength the office bestows, it extracts a
pound of public esteem.

LANGUAGE: ENGLISH

GRAPHIC: Picture George Bush, Suffering from obscured loyalty?

                   Copyright 1987 The Financial Times Limited


                              176 of 614 DOCUMENTS

                        Financial Times (London,England)

                           October 20, 1987, Tuesday

Bad Blood Between US And Iran

BYLINE: Tony Walker

SECTION: SECTION I; Overseas News; Pg. 5

LENGTH: 575 words


If a book or television series comes to be written about America's tortured
relationship with post-revolution Iran, it would be tempting for the authors to
entitle it simply: Bad Blood.  It is hard to imagine a relationship between
countries could have become so viscerally unpleasant, and in some ways
irrational.

Symbols play a role in perpetuating a cycle of hostility that appears at times
without logic.  Thus, in American eyes conditioned to a degree by television,
Iran is ruled by a cabal of crazed mullahs.  Iranians are told that their enemy
is the Great Satan.  Opposition to the ungodly US is one of the touchstones of
the revolution.

At the entrance to the Ministry of Islamic Guidance, which acts as guardian for
foreign journalists on assignment in Iran, tiles have been laid on the floor
depicting the American, Israeli and Soviet flags.

Callers are obliged, unless they wish to play hopscotch, to trample on these
symbols.  Needless to say, the US flag is placed in the centre and has suffered
most wear and tear.

On the wall of the former US embassy in Tehran, known colloquially as the "nest
of spies," posters and calligraphy denounce the "Great Satan."

While there is ample evidence that many Iranians are not much impressed by such
crude propaganda, anti-American slogans still serve as a useful rallying cry for
the revolutionary leadership.

Bad blood between Iran and the US is not simply, of course, the product of
propaganda.  Ever since the pro-American Shah of Iran was ousted in early 1979,
relations have been deeply scarred.

Iran, in some way or other, has administered humiliations to successive
Administrations.  These provocations stretch in an almost unbroken line from the
taking of US embassy personnel hostage in Tehran in 1979 to the Iran-Contra
affair.  The former helped to destroy the Carter presidency.  The latter
undermined Mr Reagan's authority.

The holding of American officials hostage in Tehran for 444 days between
November 1979 and January 1981 caused singular repugnance in the US.  Almost
nightly television bulletins about the fate of 52 Americans held against their
will by Iranian militants helped to reinforce prejudices.  The hostage crisis
became a long American nightmare.  An abortive rescue attempt which ended in
flames and confusion in the Iranian desert in April 1980, and prompted the
resignation of Mr Cyrus Vance, the Secretary of State, added to the sense of
frustration and anger.

The truck bomb slaying in October 1983 in Beirut of 241 American Marines by a
pro-Iranian group further contributed to a state of almost unrestrained
hostility between Washington and Tehran.

US officials in the region talk venomously of the role allegedly played by
Sheikh Hussein Fadlallah in the truck bombing.  According to the Americans,
Sheikh Fadlallah blessed the bombers on the night before their fatal mission.
In 1985, a massive bomb exploded near Sheikh Fadlallah's residence in Beirut.
The CIA had sought to hit back using local assasins, and had failed in its
objective.

On the Iranian side, recent US military action against it, culminating in
yesterday's strike, will merely serve to deepen enmity.  The conflict has now
moved well beyond symbols and slogans.  As long as the present Iranian regime
survives, so, it seems, will an appetite for revenge.  There is almost unlimited
further scope for conflict in what has the makings of a long historical dispute.

LANGUAGE: ENGLISH

GRAPHIC: Picture Fadlallah, blessed bombers?

                   Copyright 1987 The Financial Times Limited


                              177 of 614 DOCUMENTS

                        Financial Times (London,England)

                           October 27, 1987, Tuesday

Plans For Educating Mikhail Take Nosedive

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 707 words


President Reagan has never made a secret of his desire to play host to Mr
Mikhail Gorbachev, the Soviet leader, and on Thursday night he gave full rein to
his imagination.

Yes, he confided to reporters camped at the White House for their first
presidential news conference in Washington for seven months, he had thought
about inviting Mr Gorbachev to California.  He knew a little about the
Soviet-style beach home, and he thought "it would be kinda nice to invite him up
to our 1,500 ft adobe shack built in 1872 and let him see how a capitalist
spends his holidays."

Educating Mikhail has been an enduring theme of the late years of the Reagan
presidency.  It began with Mr Reagan delivering an American history lesson at
their first meeting in late 1985 in Geneva.  It survived last year's glitsch at
Reykjavik, and this year was due to peak with a Washington summit followed by a
whistle stop tour of the US by Mr Gorbachev who would be given empirical
evidence that capitalism works.

Whether Mr Gorbachev would ever have allowed himself to be so manipulated is
open to question.  But now the prospect of a Gorbachev visit has faded, and the
Reagan Administration's disappointment is palpable.

The bad news from Moscow came at the end of one of the blackest weeks of the
Reagan presidency: a record stock market crash, the humiliating, if expected
defeat in the US Senate of Mr Reagan's Supreme Court nominee, Judge Robert Bork,
and finally the breast cancer surgery on the First Lady, Nancy, on whom Mr
Reagan, 76, so relies.

Mr Gorbachev may have decided to take full advantage of these tribulations when
he backed away from an earlier written commitment to attend a treaty-signing
summit.  But he may also have sensed that the White House was panting a little
too hard for a telegenic summit at which the screen-conscious Mr Reagan would
undoubtedly excel.

When Mr Howard Baker, the former Republican Senate Majority leader from
Tennessee, took over as White House chief of staff this year, he made clear he
had set two goals to enable the President to recover from the Iran-Contra
scandal: a budget deficit cutting deal and an arms control pact with the Soviets
eliminating medium range missiles.

If successful, Mr Baker would go down as the man who salvaged the Presidency.
Equally important, he and the President would build an attractive platform for
the Republican Challenger in the 1988 Presidential election based on the twin
themes of peace and prosperity.

Last week's events appear to undermine the strategy.  But it would be wrong to
over-estimate the damage wrought by Mr Gorbachev's last-minute switch of mind.

President Reagan was never going to agree to a summit in Washington at any
price.  The notion that he may at this stage agree to major concessions on the
US Strategic Defence Initiative (SDI), the space based anti-missile system, is
even more far-fetched.  Mr Reagan's legacy in history - so often mentioned as a
key factor in White House thinking - is less determined by an INF arms deal than
a desire to protect and develop the SDI programme.

The commitment to SDI will scarcely diminish because of Mr Gorbachev's
opposition.  If anything, it will strengthen Mr Reagan's resolve because it
shows that he has one card in his hand which the Soviets fear.

Viewed from Washington, Mr Gorbachev may also have misread the degree of
conflict and confusion in the Administration's dealings with the Democratic
majority in Congress.  While it is true that the US Senate is attempting to
restrict Mr Reagan's ability to research, test and develop the SDI system as
permitted under the 1972 ABM Treaty, it does not follow that Democrats are
aligned with the Soviets on SDI.

Many Democrat lawmakers also buck at pressure from the Soviets on a weakened US
President, and are more likely, at least temporarily, to rally round the
Administration.

Mr Reagan is down, but by no means out.  His officials - led by Mr George Shultz
- are adamant they will not give more ground just for the sake of a summit.  The
much-touted image of Mr Gorbachev riding horses round Rancho del Cielo was at
the very least fanciful: Mr Gorbachev's 90-day absence late this summer showed a
preference for the Black Sea.

LANGUAGE: ENGLISH

GRAPHIC: Picture Mr Mikhail Gorbachev

                   Copyright 1987 The Financial Times Limited


                              178 of 614 DOCUMENTS

                        Financial Times (London,England)

                            November 2, 1987, Monday

When A Summit Is Not Enough

SECTION: SECTION I; Editorial; Pg. 22

LENGTH: 1923 words

HIGHLIGHT:
A stock market crash, a December summit.  What do they mean for American
politics?


For over a year, Democratic opinion pollsters have been picking up tantalising
signs that the wind of political change has begun to blow in their favour.

Tantalising because the anxieties being expressed about whether Mr Reagan was
leading the nation in the right direction, whether they or their children could
count on having a job, whether the White House really was likely to be better at
tackling the budget deficit than the Democrat-controlled Congress, were usually
couched in terms of worries about the future.

Today, says Mr Kirk O'Donnell, President of the Centre for National Policy, a
Democratic think tank in Washington, "it's a different same.  The future is
now."

It would be hard to overestimate the relief now spreading through Democratic
Party ranks as Wall Street has crashed - or the anxiety among Republicans as
they face the fact that the markets in which they have put so much faith could
help to dash their hopes of a third consecutive term in the White House.  True,
Friday brought Mr Reagan's party the distraction from economic matters it most
prizes - a Washington summit, and the hope of a further meeting in Moscow next
year.  But this week it will be back to business as usual in persuading Congress
to agree to harsh medicine for the budget deficit.

With every day that passes without clear signs of a White House strategy for
rebuilding the financial markets' confidence in Washington's political
leadership, the prospect of an election year recession looms closer.

On this point, history's lesson is clear and is read in the same way by
Democrats and Republicans alike: a recession over the next year would tilt the
balance of electoral advantage, probably decisively, in favour of the Democrats.

"If you assume that the stock market crash presages a recession, it helps the
Democrats," says the top political strategist of one of the Republican
Presidential candidates.  "The degree depends in part on how deep an economic
decline."

Not surprisingly, Mr O'Donnell takes a different perspective.  He argues that
the crash has presented the Democrats with an issue - economic policy - which
they have hitherto proved unable to exploit.

"There was a kind of issues vacumn until last week," says Mr James Reichley, a
political scientist at Washington's Brookings Institution.  Now he says "public
perceptions of the parties' ability to manage the economy can be altered."

But how certain is it that the Democrats will be able to take advantage of the
change?  Which candidates are best positioned to exploit the shift and what may
be the longer term implications for both parties?

That there has already been a shift in favour of the Democrats is contested by
Republican strategists.  But it is hard to resist the thought that they are
grasping at straws.

The particular straw in question is a CBS News/New York Times poll pulbished
last week and taken over a period which included October 19, "Black Monday" on
Wall Street.

Both before and after the collapse, President Ronald Reagan's approval rating
remained at 52 per cent; the number of correspondents saying that the economy
was getting worse rose only to 38 per cent after the crash from 34 per cent
before.  Republicans also point out that there has been a narrowing in the gap
between the number of registered voters saying they expect to vote Democrat (36
per cent) and Republican (33 per cent), compared with a year ago when the Iran
Contra scandal broke.

Mr O'Donnell's response to this data is that attitudes will change as the
magnitude of what has happened begins to sink in.

The travails of the Democrats - whose candidates have been awarded the
soubriquet the "Seven Dwarfs" by a media which wondered why the party's most
able politicians such as Governor Mario Cuomo of New York were apparently
sitting the 1988 race out - made a Republican victory all the more plausible.
So too did the self-destruction of the candidacies of Senator Joe Biden and
former Senator Gary Hart.  Last week's poll quoted one registered Democrat, Mr
Thomas Nettles, as saying scathingly, "What has this bunch of Democrats ever
done or said that would make you have any confidence that they could run the
world?" Such questions became even more pertinent with the prospect of Mr Reagan
and Mr Gorbachev strolling together on the White House lawn.

Most voters, the poll suggests, believe the republicans have better Presidential
candidates.  It is a judgment which top Republican strategists, such as Mr David
Keene of Senator Robert Doles's Presidential campaign, still point to as a
problem for the Democratic party.

But Mr Reagan's defeat over the nomination of Judge Robert Bork to the Supreme
Court and his inept handling of the stock market crash - coming admidst evidence
of disarray and divisions within the White House - can only have damaged the
President and his Party.  The fact that the peace issue might also escape Mr
Reagan's grasp seemed a real possibility until the weekend; but Moscow's
agreement to hold a December summit has saved the White House and the
Republicans on that score.

However, foreign policy will not be enough to rescue the Republicans if the
economy is turning sour.

An analysis in the latest issue of the National Journal, a Washington weekly,
concludes that the conventional wisdom in Washington has generally been right:
that apart from war, the economy is the key issue in election years.

"In some cases such as 1960 (a year of mild recession) it saddles the incumbent
party with a close race; in others such as 1964 and 1984 it gives an incumbent
President a cakewalk; in still others, such as 1980, it clobbers him" the report
concludes, adding: "the numbers show that landslides tend to be associated with
strong election year income growth, and the incumbent party's defeat with weak
growth."

On this yardstick, 1988 would have been a tough year for Republicans even
without a stock market induced recession, for income growth is expected to be
squeezed along with consumption as well as the growth in gross national product
expected to come from an improvement in the foreign trade balance.

Now that the threat of recession looms, it is no wonder that White House
moderates such as Mr James Baker, the US Treasury Secretary, are bending every
sinew to try to restore confidence to the financial markets - partly through
cutting a budget deal with Democrats on Capitol Hill even at the cost of
persuading Mr Reagan to swallow a tax increase.

A convincing budget accord which calmed the markets would give Mr Baker the
manoeuvring room to fight recession through an export-stimulating, managed
decline in the dollar.

With inflationary concerns already being dampened by the market's fears of
recession, Mr Baker can also hope for a continuation of the easy money policy
adopted by the Federal Reserve Board after the initial stock market crash.

Moreover, with a deficit accord in his pocket - and a convincing package cannot
yet be ruled out - Mr Baker can join Senator Robert Dole in calling for Japan
and West Germany to live up to their international commitments and adopt more
stimulative economic policies.

Were it not for Mr Baker's political skills, the chances of heading off a
recession would be bleaker and the outlook for the Republican Party even
grimmer.  His influence within the White House and on Capitol Hill is such that
it would be unwise to bet against his being able to pull together a credible
package - although the right wing in a divided White House is scarcely making
his job any easier.  By insisting on the nomination of another conservative,
Judge Douglas Ginsberg, to the Supreme Court vacancy, they are risking involving
the White House in another divisive political battle.

With the economic outlook at most certainly the key to the fortunes of both
parties, it is to be expected that their Presidential candidates are moving
cautiously in response to the stock market crisis.  They are avoiding any
precipitate moves until the outlook clears.

At the Republican candidates' debate in Houston last week, for example, it was
striking that the candidates showed no enthusiasm for debating the economic
crisis and even less for making specific recommendations - although Senator
Robert Dole and General Alexander Haig warned that it must be tackled urgently.

Senator Dole is generally seen as the Republican best placed to take advantage
of the stock market crisis, as he has been distancing himself from the White
House's budget policies for at least the past five years.

As a member of the administration, Vice President George Bush inevitably shares
the blame for the crisis - and he cannot easily distance himself without
apparent disloyalty to the President.  On the other hand, Bush is without doubt
the main beneficiary of progress on the arms control front.

The conservative wing of the Republican Party - and in particular Presidential
candidate Representative Jack Kemp, who has claimed to be one of the architects
of supply side "Reaganomics" - has also suffered, because the crash is connected
in the public mind with the budget deficit.

On the Democratic side, too, Presidential candidates have been cautious in their
comments on the collapse, and there are divided views about which Democrat
stands to gain most.

Some argue that Rep Richard Gephardt could exploit the crash, if he moves to
tone down his trade legislation rhetoric; he has been making economic policy the
centrepiece of his campaign.  Others maintain that precisely because he has
allowed himself to be labelled a protectionist, Mr Gephardt could be vulnerable
if parallels are drawn between his tough stance on trade and the protectionist
policies which helped to precipitate the Great Depression in the 1930s.

Meanwhile Senator Albert Gore, who has been stressing foreign affairs issues in
his efforts to break out of the pack of Democratic contenders, will probably be
forced to shift focus to economic issues, where he has no special expertise.

If the economy proves to be heading into even a mild recession, some Democrats
who decided not to enter the race could well reconsider; the Democratic Party's
Presidential nomination will go up in value as the economy sinks.

The late entry into the race, for example, of a man the Republicans fear -
Governor Cuomo - or an economic policy expert such as Senator Bradley is
something many influential Democrats would welcome.

A broader question is whether the influence of the liberal wing of the party
will grow if a recession does come, as was the case during the 1982 recession.

As they calculate the odds and chart their strategies for next year, candidates
in both parties can only be struck by the fluidity of the political environment.

The Democrats have been given new heart by the Wall Street crash - but they are
acutely aware that their party is not perceived by many voters to be fielding
its strongest candidates.  They must also take into account the threat that in
the Rev Jesse Jackson, the former black civil rights leader, they have a figure
who could play a powerful disruptive role.

The Republicans, for their part, must cling to the hope that they can avoid a
pre-election recession which would make the economy the decisive issue, and that
they can capitalise on arms control and other positive aspects of the Reagan
legacy.  If they can also avoid an outbreak of ideological warfare with an
increasingly disaffected right wing, then the election could well turn out to be
a cliffhanger.

LANGUAGE: ENGLISH

GRAPHIC: Drawing, no caption

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                        Financial Times (London,England)

                          November 4, 1987, Wednesday

First Black At The Centre Of Political Power

BYLINE: Nancy Dunne

SECTION: SECTION I; American News; Pg. 4

LENGTH: 372 words

HIGHLIGHT:
Nancy Dunne on the likely new National Security Adviser


Lieutenant General Colin Powell, expected to succeed Mr Frank Carlucci as Mr
Reagan's National Security Adviser, has in the American tradition travelled a
long way from his humble beginnings as the son of Jamaican immigrants who
struggled in menial jobs to make their way in New York City's South Bronx.

If appointed, Lt Gen Powell, now the deputy National Security Adviser and a
three star general, will be the first black to hold the adviser's post.  While
other blacks have held cabinet positions and high ranks, none has come closer to
the centre of power.

The opportunity would never have come if Lt Gen Colin Powell had not sacrificed
a long-term ambition to become the first black army Chief of Staff.  He was well
on his way when President Reagan asked him - in the wake of the Iran-Contra
affair - to give up a key command in Germany to become Mr Carlucci's number two.

Lt Gen Powell's military and political career has repeatedly crossed that of Mr
Caspar Weinberger, the retiring Defence Secretary, and Mr Carlucci.  After
serving in Vietnam, he was chosen as a White House fellow in 1972, where he
worked under Mr Carlucci, then deputy director of the Office of Management and
Budget.  The head of the Office was Mr Weinberger.

When Mr Weinberger went to the Defence Department under President Reagan, Mr
Carlucci followed as Deputy Defence Secretary.  In 1983 after holding an army
command, Lt Gen Powell joined the team as senior military assistant.  Acting
under orders, he was responsible for transferring to the Central Intelligence
Agency the arms sold to Iran last year.

Like Mr Carlucci, Lt Gen Powell has worked for and gained the respect of both
parties.  Mr Powell worked as senior military assistant to the Deputy Defence
Secretary in the Carter Administration.  The two are perceived as more moderate
than past Reagan aides and have sought to improve the National Security
Council's relationship with the press.

Lt Gen Powell, described as "the orchestrator" of national security decisions,
heads the agency's policy review group, a high level inter-agency committee,
which meets two or three times a week to discuss national security issues and to
fashion consensus between the agencies.

LANGUAGE: ENGLISH

GRAPHIC: Picture Lt Gen Colin Powell, humble beginnings

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                              180 of 614 DOCUMENTS

                        Financial Times (London,England)

                          November 4, 1987, Wednesday

Swiss Records Handed Over

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 20 words


Switzerland lifted bank secrecy laws and gave a US prosecutor bank records
relating to the Iran-Contra arms scandal.

LANGUAGE: ENGLISH

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                              181 of 614 DOCUMENTS

                        Financial Times (London,England)

                           November 17, 1987, Tuesday

Reagan To Face Sharp Criticism Over Irangate

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 403 words


President Ronald Reagan and his Administration will be sharply criticised in a
report due to be published tomorrow by the congressional committees on the
Iran-Contra arms affair.

The 500-page report on the joint House-Senate panel's 11-month inquiry will
deliver a further political blow to the embattled President.  But Republicans
have drawn up a 150-page minority report more sympathetic to Mr Reagan.

The report is not expected to contain any significant new dislosures about the
secret US arms sales to Iran and the subsequent diversion of profits to the
Nicaraguan Contra rebels during a Congressional ban on US military aid.
Televised hearings on Capitol Hill this summer largely told the story and
represented the political high-water mark of the controversy.

The report's main thrust is likely to be that Mr Reagan was responsible for
allowing the normal channels of government to be ignored by key officials,
including his then National Security Adviser, Vice Admiral John Poindexter, and
White House aide, Lt Col Oliver North.  As such, it will be further criticism of
the President' tax management style and his leadership.

Its recommendations could include calls for tighter reporting by the exectuive
to Congress of "covert operations," the undercover work by the Central
Intelligence Agency aimed at destabilising foreign governments hostile to the
US.

The main contention between Democrats and Republicans was whether Mr Reagan knew
of the diversion of funds to the Contras.  The inquiry has been unable to
resolve the issue because key documents were shredded and several witnesses were
considered unreliable or unco-operative.  Another shadowy aspect of the affair
unlikely to be resolved in the role of Mr William Casey, the CIA director who
died this year from brain cancer.

The Congressional report is by no means the final word on the worst foreign
policy fiasco in the seven-year Reagan presidency.  A grand jury is
investigating the criminal aspects of the affair, and indictments are expected
before the end of the year.

The Iran-Contra committees' effort to produce a bipartisan report was torpedoed
by political divisions between Republicans and Democrats.  The unwieldy nature
of the panels - 11 members on the Senate select committee and 15 on the House
side - further complicated drafting in what, in retrospect, is a far less
clear-cut scandal than the Watergate affair.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                           November 17, 1987, Tuesday

Wright To Challenge President's Agenda

BYLINE: Stewart Fleming

SECTION: SECTION I; American News; Pg. 3

LENGTH: 963 words

HIGHLIGHT:
Stewart Fleming on a new level of intensity in the struggles on Capitol Hill


There was no mistaking the face that the television cameras caught peering down
on the street from the rooms of Mr Jim Wright, Speaker of the House of
Representatives, last Thursday.

It was Mr Adolfo Calero, one of the leaders of the Contra rebels in Nicaragua,
soldiers who owe nothing to Mr Wright but owe their very existence to President
Ronald Reagan.

There was no denying either that, in the course of that remarkable day Mr
Wright, the combative former amateur boxing champion who believes that the
Speaker's position is the equal of the President's, also entertained in his
rooms President Daniel Ortega of Nicaragua and Mr George Shultz, the Secreatary
of State.

The following day Mr Wright was present at the meeting between Mr Ortega and
Cardinal Obando y Bravo, the designated mediator in the Contra war, at the
Vatican Embassy in Washington as President Ortega presented his ceasefire
poposals to the Catholic primate of Nicaragua.

Just who invited the Cardinal to Washington and presented President Ortega with
a Washington stage for his ceasefire initiative at a time when the President was
explicitly refusing to deal directly with his Central American enemy, is
unclear.  But Mr Ortega would not have come without Mr Wright's encouragement.

No wonder that by Saturday a dumbfounded Reagan Administration finally gave vent
to its fury over this diplomatic tour de force by an American politician who has
no special constitutional authority in the conduct of foreign policy.  The
Washington Post on Sunday quoted an anonymous senior Administration official
describing Mr Wright as participating with President Ortega in an "unbelievable
melodrama ...  an excercise in guerrilla theatre" that dealt "a serious setback"
to the regional peace process.

For Mr Wright's initiative represents more than just another challenge to the
President's widely accepted primacy in the conduct of American foreign policy.

It marks a further diminution in the President's authority.  Now, it seems, even
Central American governments are bowing to Mr Wright's warnings that they had
better deal with him directly for he will be in power long after Mr Reagan is
gone.

It also raises again the question of the limits of congressional authority in
the conduct of American foreign policy.

Congress, in particular the Senate, was indeed granted special but limited
powers by the Constitution, including the right to ratify treaties which will be
used next year if Washington and Moscow reach an arms control agreement.

But a 1936 Supreme Court ruling enshrines the conventional view Americans have
of who runs foreign policy.  It said that the President has a "very delicate
plenary and exclusive power ...  as the sole organ of the federal government in
the field of international relations ...  to speak or listen as the
representative of the nation."

How is it then that today Mr Reagan's conduct of foreign policy is under such
attack?  For this is not the first successful congressional assault on a foreign
policy priority to which President Reagan and his conservative ideologues have
an emotional attachment.

To the dismay of conservatives such as departing Defence Secretary Caspar
Weinberger, the President's top aides have conceded that the US will not press
ahead with the Strategic Defence Initiative in ways which will undermine the
crucial 1972 Anti-Ballistic Missile Treaty, a concession Mr Reagan has yet to
approve.

Mr Reagan's credibility as a foreign policy manager, his imminent arms control
triumph notwithstanding, has long been under attack.  Tomorrow the Congressional
Report into the Iran/Contra arms scandal, perhaps the most devastating official
condemnation of his tenure, will be published.  It was the fiasco surrounding
the sale of arms to Iran and the clandestine and illegal support for the Contras
which finally undermined the President's public credibility on foreign policy.

But there is more to Mr Reagan's woes than this.  The loss of control of the
Senate in the 1986 mid-term elections not only gave Senator Sam Nunn the
chairmanship of the armed service committee and enhanced stature as an expert
critic on US strategic policy.  It laid a foundation, too, for Mr Wright, the
newly elected Speaker, to pursue more effectively his ambition to set the agenda
for the President's last two years in office.

A year ago Mr Wright, to the horror of many in his party, publicly announced
that he favoured a tax increase as part of a budget deficit reduction
compromise.  This week could see Mr Wright's political foresight rewarded, for a
tax increase is indeed on the agenda for the budget summit.

But if shifts in power on Capitol Hill, the Iran-Contra scandal and the
approaching end of Mr Reagan's second four-year term have contributed to his
embarrassments, so too has the difficulty Mr Reagan has had in adjusting to the
need to compromise with more powerful political adversaries.

Nowhere has this been more evident than in the battle over the Supreme Court
vacancy, which exposed the debilitating conflict between ideological
conservatives and pragmatists in the Administration and the Republican Party.

Mr Wright's Central American initiative, marking a new level of intensity in the
partisan struggles in Washington, provides another cause for concern.

It could be the harbinger of even more bitter and paralysing political conflicts
ahead.  If so, this would exacerbate the anxieties of those in Washington
already concerned about the damage the country could suffer from the destruction
of Mr Reagan's presidency.

Mr Reagan's ideological commitment helped to give his presidency its momentum
when he took office.  The danger now is that it will continue to contribute to
its paralysis over the next 14 months.

LANGUAGE: ENGLISH

GRAPHIC: Picture, Jim Wright, combative former boxer

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                        Financial Times (London,England)

                          November 18, 1987, Wednesday

Reagan To Give Iran-Contra Answers

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 326 words


President Ronald Reagan yesterday agreed to answer written questions about the
Iran-Contra scandal put by the leader of the criminal investigation into the
affair.

This emerged on the eve of the release of a 700-page congressional report into
the foreign policy debacle.

Republicans last night attempted to pre-empt the report's criticism by issuing a
28-page minority version which largely exonerated Mr Reagan and stated there was
no White House cover-up.

The decision to comply with a request by Mr Lawrence Walsh, the independent
counsel, for information from the President is unusual.

Mr Reagan agreed to hand extracts from his personal diary to the House-Senate
panel investigation and was twice interviewed by a presidential board.

Mr Walsh's questions carry more weight because he is considering indictments
against key players in the affair, including the former senior aide, Lt Col
Oliver North, and the former national security adviser, Rear Admiral John
Poindexter.

Without questioning Mr Reagan, Mr Walsh would risk defendants claiming that they
had the Presidents approval for their actions.

The Iran-Contra affair exploded last November when it was disclosed that the US
had secretly sold weapons to Iran and that the profits had been siphoned off to
the US-backed Contra rebels during a congressional ban on US military aid.

The minority report - by eight of the 11 Republicans on the joint panel - said
Mr Reagan made mistakes but "there was no constitutional crisis, no systematic
disrespect for the rule of law, no grand conspiracy, and no Administration-wide
dishonesty or cover-up."

The majority report representing the Democrats' views is expected to criticise
Mr Reagan for allowing senior aides to disregard the law and normal processes of
government and to make recommendations to prevent a repetition, including
expanded congressional involvement in executive-directed covert actions against
foreign Governments.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          November 18, 1987, Wednesday

Reagan Quizzed

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 63 words


President Reagan has been asked to respond to written questions about the
Iran-Contra arms deal by the special prosecutor investigating the affair, the
White House said on Tuesday.  The revelation came on the eve of public release
of a congressional report on the affair, and as several Republican legislators
issued an opinion exonerating the president of any cover-up.

LANGUAGE: ENGLISH

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                              185 of 614 DOCUMENTS

                        Financial Times (London,England)

                          November 19, 1987, Thursday

Iran-Contra Affair Showed Confusion At The Highest Level

SECTION: SECTION I; American News; Pg. 3

LENGTH: 1610 words

HIGHLIGHT:
Congress report blasts dishonesty and deception.  Never again must NSC engage in
correct operations, say committees


The following is an edited version of the executive summary of the 690 page
congressional report on the Iran-Contra affair.

Starting in 1983 Congress imposed increasingly restrictive laws on US aid to the
Contra rebels in Nicaragua.

The President felt strongly about the Contras, and he ordered his staff, in the
words of his National Security Adviser, to find a way to keep the Contra "body
and soul together." Thus began the story of how the staff of the White House
advisory body, the National Security Council, became an operational entity that
secretly ran the Contra assistance effort, and later the Iran initiative.

The action officer placed in charge of both operations was Lt Col Oliver L
North.

Between June 1984 and the beginning of 1986, the President, his National
Security Adviser and the NSC secretly raised Dollars 34 m for the Contras from
other countries.  An additional Dollars 2.7 m was provided for the Contras
during 1985 and 1986 from private contributors.

The first contributions were sent by the donors to bank accounts controlled and
used by the Contras.  However, in July 1985, North took control of the fund and
- with the support of two National Security Advisers (Robert McFarlane and John
Poindexter) and, according to North, CIA director William Casey - used those
funds to run the covert operation to support the Contras.

At the suggestion of William Casey, North recruited Richard V Secord, a retired
Air Force major-general with experience in special operations.  Secord set up
Swiss bank accounts, and North steered future donations into these accounts.
Using these funds, and funds later generated by the Iran arms sales, Secord and
his associate, Albert Hakim, created what they called the Enterprise, a private
organisation designed to engage in covert activities on hehalf of the US.

The Enterprise, functioning largely at North's direction, had its own aircraft,
pilots, airfield operatives, ship, secure communications devices, and secret
Swiss bank accounts.

For 16 months, it served as a secret arm of the NSC staff, carrying out with
private and non-appropriated money, and without accountability or restriction
imposed by law on the CIA, a covert Contra aid programme.

By executive order and National Security decision directive issued by President
Reagan, all covert operations must be approved by the President personally and
in writing.  By statute, Congress must be notified about each covert action.

The covert action directed by North, however, was not approved by the President
in writing.  Congress was not notified about it.  And the funds to support it
were never accounted for.

The Administration went to considerable lengths to avoid notifying Congress.

While the President was denying any illegality, his subordinates were engaging
in a cover up.  Several of his advisers had expressed concern that the 1985
sales violated the Arms Export Control Act, and the "cover story" had been
agreed on if these arms sales were ever exposed.  After North had three
conversations on November 18 1986, about the legal problems with the 1985
Israeli shipments, he, Poindexter, Casey, and MacFarlane all told conforming
false stories about US involvement in the shipments.

On learning that the President had authorised the Attorney General to gather the
relevant facts, North and Poindexter shredded and altered official documents on
November 21 1986, and later that weekend.  On November 25 1986, North's
secretary concealed classified documents in her clothing and, with North's
knowledge, removed them from the White House.

According to North, a "fall guy" plan was proposed by Casey in which North and,
if necessary, Poindexter, would take the responsibility for the covert Contra
support operation and the diversion.

The diversion was discovered on November 22 1986, when a Justice Department
official, assisting the Attorney General's fact-finding inquiry, found a
"diversion memorandum" that had escaped the shredder.

Prior to the discovery of the diversion memorandum, each interview by the
attorney General's fact finding team had been conducted in the presence of two
witnesses, and careful notes were taken in accordance with standard professional
practices.  AFter discovery of the division memorandum - which itself gave rise
to an influence of serious wrongdoing - the Attorney General departed from the
standard practices.

The NSC staff was already engaged in covert operations through Secord when, in
the summer of 1985, the government of Israel proposed that missiles be sold to
Iran in return for the release of seven American hostages held in Lebanon in the
process of improved relations with Iran.

In the summer of 1985 the President authorised Israel to proceed with the sales.
The NSC staff conducting the Contra covert action also took operational control
of implementing the President's decision on arms sales to Iran.

The President did not sign a finding for this covert operation, nor did he
notify Congress.  There followed a series of arms for hostages swaps between the
US and Iran in late 1985 to September 1986, using unidentified intermediaries in
Tehran.

In February 1986, the US, acting through the Enterprise, sold 1,000 TOW missiles
to the Iranians.  The US also provided the Iranians with military intelligence
about Iraq.  All the remaining American hostages were supposed to be released
upon Iran's receipt of the first 50 TOWs.  None was.  The difference between
what the Enterprise paid the US for the missiles and what it received from Iran
was more than Dollars 6 m.  North directed part of this profit for the Contras
and for other convert operations.  Poindexter testified that he authorised this
"diversion."

According to North, William Casey saw the "diversion" as part of a more
grandiose plan to use the Enterprise as a stand-alone off-the-shelf covert
capacity that would act throughout the world while evading congressional review.

In September and October 1986, the NSC staff began negotiating with a new group
of Iranians, the "Second Channel," that Albert Hakim had opened, in part,
through promises of bribes.  Once again, the Administration insisted on release
of all the hostages but settled for less.

The decision to designate private parties to carry out the arms transaction had
other ramifications.  There was virtually no accounting for the profits from the
arms deal.  All told, the Enterprise received nearly Dollars 48 m from the sale
of arms to the Contras and Iran, and a contribution directed to it by North.

The common ingredients of Iran and Contra policies were secrecy, deception and
disdain for the law.

The Administration's departure from democratic processes created the conditions
for policy failure, and led to contradictions which undermined the credibility
of the US.

The record of the Iran Contra affairs shows a seriously flawed policy making
process.  There was confusion and disarray at the highest levels of government.

The Iran-Contra affair was characterised by pervasive dishonesty and inordinate
secrecy.

The NSC staff turned to private parties and third countries to do the
government's business.  Funds denied by Congress were obtained by the
Administration from third countries and private citizens.

The solicitation of foreign funds by an Administration to pursue foreign policy
goals rejected by Congress is dangerous and improper.

The confusion, deception and privatisation which marked the affair were the
inevitable products of an attempt to avoid accountability.  Congress, the
Cabinet, and the Joint Chiefs of Staff were denied information and excluded from
the decision-making process.

Democratic procedures were disregarded.  The NSC staff was created to give the
President policy advice on major national security and foreign policy issues.
Here it was used to gather intelligence and conduct covert operations - a
departure from its proper functions.

Administration officials holding no elected office repeatedly showed disrespect
for Congress's efforts to perform its constitutional oversight role in foreign
policy.

Who was responsible?  The central figure was Lt Col North who co-ordinated all
of the activities and was involved in all aspects of the secret operations.

But he had the express approval of Admiral John Poindexter and at least the
tacit support of Robert MacFarlane.  In addition we believe that William Casey
encouraged North, gave him direction and promoted the concept of an extra legal
covert organisation.

Nevertheless, the ultimate responsibility for the events in the affair must rest
with the President.  If the President did not know what his National Security
Advisers were doing, he should have.  It is his responsibility to communicate
unambiguously to his subordinates that they must keep him advised of important
actions they take for the Administration.

It was the President's policy - not an isolated decision by North or Poindexter
to sell arms secretly to Iran and to maintain the Contras.

Several of the President's advisers lied, shredded documents and covered up
their actions.  These facts have been on the public record for months, but the
President has yet to condemn their conduct.

The President created or at least tolerated an environment where those who did
know of the diversion believed with certainty they were carrying out the
President's policies.

This same environment enabled Admiral Poindexter to testify that: "Frankly we
were willing to take some risks with the law" and a secretary who shredded,
smuggled, and altered documents to tell the committees that "somtimes you have
to go above the written law."

LANGUAGE: ENGLISH

GRAPHIC: Picture, no caption; Picture, no caption; Picture, no caption; Picture,
no caption; Picture Key players in the Contra scandal, from left, Oliver North,
John Poindexter, Robert MacFarlane, Richard Secord, William Casey

                   Copyright 1987 The Financial Times Limited


                              186 of 614 DOCUMENTS

                        Financial Times (London,England)

                          November 19, 1987, Thursday

Reagan Blamed For Iran-Contra Scandal

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 627 words


President Reagan bears the "ultimate responsibility" for the Iran-Contra scandal
in which his senior aides broke laws, ran and bungled a secret foreign policy
and then sought to cover up their misdeeds, the 690-page congressional report
into the affair said yesterday.

In a sharp indictment of Mr Reagan's leadership, the majority report blamed the
President for creating an environment in which established codes of government
were ignored.  It recommended tighter controls on the conduct and reporting to
Congress of covert US foreign policy.

While much of the political fall-out from the affair has already occurred, the
report is a further political blow to the President as he prepares for his
summit meeting with Mr Gorbachev, the Soviet leader, in Washington on December
7.  It also weakens his authority and prestige as he tries to conclude an
agreement with Congress on cutting the record Dollars 148 bn (84 bn Pounds
(pds)) Federal budget deficit.

The White House commended the joint House-Senate panel for its nine-month
inquiry but said Mr Reagan had already introduced reforms to prevent a
recurrence of the scandal.

Administration officials took comfort from a 150-page minority report, signed by
eight Republicans, which rejected charges of law-breaking and violations of the
US Constitution.  Three Republican Senators, however, signed the majority
version.

The Congressional report makes no judgment on whether two former senior White
House officials at the centre of the affair, Marine Lt Col Oliver North and Rear
Admiral John Poindexter, the former national security adviser, engaged in
criminal activities.  The two men are among several targets in a separate
criminal investigation led by a special prosecutor.

However, the report makes clear that numerous congressional laws were violated
during a secret 18-month White House operation to sell arms to its arch enemy,
Iran, and to divert the profits to the Nicaraguan Contra rebels during a ban on
US military aid.

On the key question of whether Mr Reagan knew about the diversion of funds, the
report was ambivalent.  "If the President did not know ...  he should have," it
said, adding that the President had created or at least tolerated an environment
in which his officials had disregarded the law.

The report suggested throughout that Col North was a central figure controlling
Contra funds and organising arms sales to Iran in return for the release of US
hostages held in Lebanon.  It also discloses fresh evidence that the colonel
tried to interfere with Federal Bureau of Investigation inquiries into US arms
supplies to the Contras.

However, it largely accepts Col North's testimony, given during dramatic public
hearings in the summer, that he was guided by his mentor Mr William Casey, the
former director of the Central Intelligence Agency, who died of brain cancer
early in the year.

Because of the way Mr Casey allegedly used Col North and the National Security
Staff at the White House to conduct "off-the-shelf" covert operations abroad, in
place of the CIA , the majority report recommends tighter controls.

They include restrictions on the use and duration of "Findings," the formal
legal provision which a president must sign to authorise covert actions, defined
as undercover operations against governments hostile to the US.  The National
Security Council would also be barred from involvement.

Elsewhere, the report criticises Mr Ed Meese, the US Attorney General and a
close friend of the President, for conducting a sloppy investigation of the
affair when the arms sales to Iran first became public a year ago.  It also says
that the President made several public statements at the time denying the
arms-for-hostages deals which were untrue.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              187 of 614 DOCUMENTS

                        Financial Times (London,England)

                           November 20, 1987, Friday

Conspiracy Yields To Open Government

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 5

LENGTH: 744 words

HIGHLIGHT:
Lionel Barber in Washington assesses the impact of the Iran-Contra scandal


The Congressional report into the Iran-Contra affair represents one of the most
exhaustive investigations into the conduct of US foreign policy in the nation's
history.  It draws on interviews with hundreds of witnesses, several hundred
thousand pages of often classified government documents, 11 weeks of televised
hearings, and it comes up with a remarkably reassuring conclusion: the system is
workable, it was the people who ran it that failed.

Few would disagree that several of President Reagan's most senior advisers
turned out to be flawed characters: the icy Admiral John Poindexter who believed
that in misleading Congress, the press and the public he was serving his
country; the hyperactive marine Lt Col Oliver North who sent arms and men around
the world with little regard for the law or established codes of governance;
and, above all, the now dead CIA director, Mr William Casey, whom the report
nails down as a pivotal figure in the affair.

It was he who bent, twisted and finally broke the bond of mutual trust which has
to exist between the leadership of Congress and the executive if effective
foreign policy is to be conducted.  The report is littered with examples of Mr
Casey's refusal to play straight, best summed up in 1984 by the secret mining of
the Nicaraguan harbours by CIA-sponsored undercover operators and his later
reneging on a subsequent pledge to 60 Senators to open a "new spirit of
co-operation."

If he were alive, Mr Casey would argue he was acting out of the best motives,
notably the desire to fulfill the President's policy of preventing the Soviet
Union from gaining a toehold in Central America through its support of the
Leftist Sandinista government in Nicaragua.  In his view, the Congressional
oversight laws on the CIA, introduced post Vietnam, unduly restricted the
executive's freedom of action.  But the overwhelming impression is of a man
prepared to go at great lengths - even distorting raw intelligence data - to get
his own way.

That President Reagan failed to intervene is a testimony as much to his relaxed
style of leadership as to his agreement with the pursuit by the "cabal of
zealots" of the twin elements of the Iran-Contra scandal: the sale of arms to
the terrorist sponsor Iran in return for American hostages, and the secret
arming and financing of the Nicaraguan Contra rebels during a Congressional ban
on US military aid.

Those senators who complain that Mr Reagan has failed to condemn the action of
his aides miss the point.  The President has never believed there was serious
wrong-doing in high places; he is still reluctant to concede that arms were
bartered for hostages.  Indeed, months went by and many untruths were uttered
before he finally acknowledged that mistakes were made and he bore ultimate
responsibility.  It remains for the special prosecutor to establish criminal
guilt, if any, among the key players.

True, Mr Reagan has reacted to the scandal by making top personnel changes and
directing the National Security Staff not to take part in covert operations.
But the ingrained stubbornness and reluctance to shift old friends remains as
firm as ever.  Where else but in Mr Reagan's Washington could the US Attorney
General Mr Edwin Meese avoid resignation for his bumbling inquiry into the Iran
arms affair, his faulty memory and his delay in releasing key information to the
Congressional committees?

Mr Reagan's extreme tolerance towards his own advisers - coupled with his
antagonistic attitude towards Congress - has been a mark of his presidency.  So
long as he enjoyed the support of the American public that may not have
mattered.  But, with the disclosure a year ago, that he authorised US arms sales
to Iran, that trust and confidence in Mr Reagan as a leader evaporated.

That is the short-term legacy of the Iran Contra affair.  It accounts for the
vacuum in the White House, the Stalemate over important international issues
such as the US budget crisis, and the dwindling power of the President as he
prepares to leave office.

And yet it would be wrong to dismiss the Congressional inquiry as a distraction
which has sapped the President's energies and created inertia in Washington.
Few other countries would countenance this level of public scrutiny of
government operations, least of all in the sensitive arena of foreign policy.
In that respect, the report is a testimony to the vitality of the open system of
American government.

LANGUAGE: ENGLISH

GRAPHIC: Picture Senators Warren Rudman, vice-chairman of the Iran-Contra
committee, and Daniel Inouye, the chairman, with Representative Lee Hamilton at
the launch of the Congressional report into the scandal

                   Copyright 1987 The Financial Times Limited


                              188 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 11, 1987, Friday

Reagan, Gorbachev Announce Progress And Another Summit

BYLINE: Robert Mauthner, Stewart Fleming, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 816 words


President Ronald Reagan and Mr Mikhail Gorbachev, the Soviet leader, said at the
end of their three-day summit yesterday that they had made some headway in
negotiations on cutting strategic nuclear arms by 50 per cent and that a further
summit would be held in Moscow towards "the latter part of the first half of
next year."

Both leaders claimed that their summit in Washington had brought the superpowers
closer together.  However, they conceded that they had failed to achieve any
major breakthroughs on key issues dividing them.

In their statements at the end of the talks, Mr Reagan and Mr Gorbachev
underlined the frank nature of their talks.  They said, however, that much work
needed to be done if they were to build on the good atmosphere in which their
face-to-face discussions took place.

"This summit has been a clear success," Mr Reagan said, but he added, in a clear
indication that no major problems had been resolved: "It is up to both sides to
ensure that the lustre does not wear off and to follow through on our
commitments as we move forward to the next steps in improving the relations
between our countries and peoples."

Mr Gorbachev, striking a more guarded note in his response, said that his visit
to Washington had "on the whole justified our hopes."

Standing under an umbrella outside the White House in light rain, Mr Gorbachev
added that his discussions with Mr Reagan had been "businesslike and frank" on
the pivotal problems of Soviet American relations.

He added that some "headway" had been made towards achieving substantial
reductions in strategic offensive arms, although a lot of work remained to be
done.

Neither leader gave any hint of a narrowing of their differences on regional
issues, in particular on the question of the Soviet withdrawal of its troops
from Afghanistan.

Congressional leaders told Mr Gorbachev that withdrawal from Afghanistan would
facilitate Senate ratification of the treaty to ban intermediate-range nuclear
forces.

In spite of the limited progress on substantive issues, the summit has the
makings of a political victory for both men.  Mr Richard Wirthlin, the
President's pollster, reported yesterday that for the first time since the
Iran-Contra scandal broke a year ago, his polls showed that the President's
approval ratings had risen sharply to more than 60 per cent.

Mr Gorbachev, too, has scored a public relations triumph, which was underscored
again yesterday.  Minutes before his last meeting with Mr Reagan at the White
House was due to begin, he halted his heavily guarded motorcade in the centre of
Washington.  To the astonishment and evident delight of onlookers, he began
shaking hands and waving to the crowd which quickly gathered.

Mr Gorbachev's success in taking centre stage and appealing over the head of the
President has already helped to swing support on Capitol Hill in favour of the
INF treaty which will require Senate ratification before it can go into effect.
It is also helping him to influence the wider political debate in the US over
Soviet-American relations.

In a number of areas, however, Mr Gorbachev's visit has fallen short of
expectations.  Hopes that he would prove more accommodating on human rights,
particularly on Jewish emigration from the Soviet Union, have been disappointed
and the pressure he came under to respond to US concerns on this score clearly
irritated him.

Equally, neither man appears to have been prepared to compromise over their
differing positions on the role of space defences and Mr Reagan's so-called
"Star Wars" Strategic Defence Initiative (SDI).

In his departure statement, Mr Gorbachev expressed the hope that he would be
able to make another visit to the US to "meet face to face with the great
(American) people, to chat, and to have some lively exchanges with ordinary
Americans."

At a press conference just before leaving Washington, Mr Gorbachev called his
summit with President Reagan a success but said serious discords persisted
between the superpowers.

"While realistically assessing that differences still exist and at some points
these differences are very serious indeed, we do not regard them as
insurmountable, rather they urge us on towards greater dialogue," he added.

He said the signing of the INF treaty abolishing medium-range nuclear weapons on
Tuesday was a triumph.

In his talks with Reagan, discussions on reducing long-range strategic arms took
up most of the time.  "It is a complex issue, but on this road we must make a
serious breakthrough," he said.  Mr Gorbachev began hectic last-day meetings at
a breakfast with Mr George Bush, the Vice-President, which ran an hour over
schedule and embroiled the General Secretary in a controversy between Republican
candidates for the presidency.

Mr Bush was accused by rival camps of trying to exploit his position to
reinforce his presidential prospects.

LANGUAGE: ENGLISH

                   Copyright 1987 The Financial Times Limited


                              189 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 14, 1987, Monday

Swiss Banking 8;
Still A Marketable Advantage

BYLINE: William Dullforce

SECTION: SURVEY; Pg. VIII

LENGTH: 1062 words

HIGHLIGHT:
Bank secrecy survives, in spite of some modifications


Switzerland's bank secrecy has its spectacular side.  Attempts by the new
Philipine and Haiti regimes to recover loot allegedly salted away by former
presidents Marcos and Duvalier, the Boesky and Levine insider trading scandals
in New York, the laundering of drugs money and the use of Swiss banks in the
Iran-Contra affair have all put it in the headlines over the past two years.

Needless to say, the ballyhoo is anathema to sober Swiss bankers.  Yet the
publicity has helped promote modifications to Swiss bank secrecy, which the big
banks at least accept as inevitable, if they are to continue to be leading
players on the global financial market.

Nonetheless, the quip now widely bruited abroad, that Swiss bank secrecy has
been shot as full of holes as a piece of Emmental cheese, is misconceived.
Remember what the Swiss say about Emmental imitators: "Anyone can make the
holes, but only the Swiss can make the cheese."

Under pressure from other governments, principally the US, the Federal Council
and its Justice Department are introducing laws and practices that make it
easier and quicker for foreign authorities to obtain from Swiss banks the
information they seek to help prosecute cases in their courts.

But the Swiss have not caved in.  On the contrary, by patient negotiations they
have persuaded the Americans to show more respect for Swiss legal perceptions.

Bank secrecy has been eroded at the edges; some of its murkier aspects have
disappeared under exposure.  Yet because of the fundamental respect for private
rights written into Swiss laws, and because of Swiss refusal to regard tax
evasion (as distinct from tax fraud) as a crime, secrecy still gives Swiss banks
a marketable advantage over banks in other financial centres.

Events this year have included the signing of yet another memorandum of
understanding with the US, the near completion of the passage through parliament
of an insider trading bill, and publication of a draft law penalising money
laundering.

In addition, the Banker's Association has introduced a new version of the
convention de diligence, the gentleman's agreement under which the banks
undertake to ascertain the identity of their clients and to prevent bank secrecy
from being exploited to hide criminally acquired funds.  Revision of the
convention had been necessitated by the National Bank's decision to withdraw as
referee.

The request for legal assistance in the Irangate case, filed in Berne by the US
last December, provoked some ironical comment among bankers.  It was allegedly
servants of the very administration that had been pressing Switzerland to ease
its secrecy rules who had taken advantage of that facility.

Relations with the US over legal matters, however, entered a calmer phase this
year.  In Washington in November Mrs Elizabeth Kopp, the Federal Justice
Councillor (minister), and Mr Edwin Meese, the US Attorney-General, signed a
memorandum spelling out new guidelines for granting legal assistance.

Basically, the US agreed to work through established channels and to avoid
"unilateral compulsory measures" while the Swiss authorities undertook to speed
up procedures.  US courts and prosecutors have been infuriated in the past at
having to wait years to get their hands on key documents, as opposition lawyers
mounted successive appeals in Swiss courts.

Commonly lawyers have appealed on the ground that vital Swiss interests would be
violated.  Now only Swiss citizens, permanent Swiss residents or owners of Swiss
companies will be able to use this argument.  Moreover, appeals must be lodged
within 10 days of a judgment.

On the other hand, in the latest memorandum the US authorities undertake to use
the agreed procedures in asking for legal assistance and to use their "best
efforts" to avoid "unilateral compulsory measures." Instead they will apply
"moderation and restraint."

This should mean in practice that US courts will be advised not to impose fines
on, or seize the assets of, Swiss banks and businesses in the US, in attempts to
speed up the procurement of documents from Switzerland.  The Swiss regarded such
action by US judges as an infringement of Swiss legal sovereignty.

Improvement in the legal climate between the US and Switzerland over bank
secrecy also extends to insider trading.  An amendment to the Swiss Criminal
Code, making insider trading a criminal offence, is virtually certain to come
into effect next year.  In October, the lower house of the Swiss parliament
passed, with minor modifications, a bill earlier approved by the upper house.
The two chambers are expected to iron out the remaining differences.

The amendment to the code calls for prison sentences of up to three years and
fines for people who themselves gain from, or help others to profit from,
confidential information about transactions on stock markets.

It should close the gap between earlier Swiss perceptions of what was
permissible and the contention by the US Securities and Exchange Commission
that, by using Swiss banks as intermediaries, investors could exploit insider
information on US stock exchanges while remaining immune from US penal action.

Swiss legislation on insider trading was certainly accelerated, if not prompted,
by the quarrel over the Sante Fe case which erupted in 1981.  Then, the SEC
alleged that shares and call options to stock in Sante Fe International had been
bought through Swiss banks just before its merger with the Kuwait Petroleum
Company was announced.  The SEC had to wait nearly three years to acquire the
evidence it needed from Switzerland.

Swiss bank secrecy is famous or infamous, according to the observation point.
The Swiss argue - and really believe - that the pejorative label is unwarranted,
especially after the greater readiness they have been showing to co-operate in
releasing information to foreign courts and government agencies investigating
criminal activities.  Bank secrecy has not prevented the Swiss from co-operating
effectively in some recent drug trafficking cases.

But privacy remains an enforceable right under the Swiss Civil Code, and the
principle of "double criminality" still applies to foreign requests for legal
assistance.  The offence must be a crime under Swiss law as well as under that
of the country seeking aid - and in Switzerland mere tax evasion is not a crime.

LANGUAGE: ENGLISH

GRAPHIC: Picture, no caption; Picture Mrs Elizabeth Kopp and Mr Edwin Meese, new
guidelines

                   Copyright 1987 The Financial Times Limited


                              190 of 614 DOCUMENTS

                        Financial Times (London,England)

                           December 14, 1987, Monday

Resolve In The Face Of A Wearisome War

BYLINE: Andrew Gowers, Baghdad

SECTION: SECTION I; Editorial; Pg. 18

LENGTH: 2106 words

HIGHLIGHT:
Andrew Gowers, recently in Baghdad, on preparations for a new onslaught by Iran


Like a boxer punch-drunk after countless gruelling rounds, this month Iraq is
bracing itself for another big Iranian land offensive in the seven-year-old Gulf
war.

For several weeks, all the familiar signs of mass mobilisation in Iran - the
calls to the faithful, the training exercises, the clearing of hospitals for the
wounded - have been heard on the air waves and seen on satellite photographs.

Iraqi officials and Western analysts in Baghdad reckon that around a quarter of
a million Iranian troops are gathering close to southern warfront in readiness
for an onslaught, probably aimed, as in previous years, at the battered south
Iraqi port of Basra.  The Iraqis are mustering their usual array of heavy armour
and claim to be mobilising an equivalent number of soldiers.  Heavy loss of life
is the one predictable outcome in a war which has already claimed more than a
million casualties on both sides.

One might expect the impending fighting to be causing a severe attack of nerves
in Iraq, especially since all hopes that the United Nations might be able to
broker an end to the war now seem to have been quashed.  The country has, after
all, been fending off increasingly successful waves of Iranian assaults for more
than five years.  Early this year, it came perilously close to losing the Battle
for Basra outright, with incalculable consequences for its stability and morale.

Yet in Baghdad these days there is a curious, almost unreal, sense of bravado.
The newspapers are full of propagdanda predicting that Iran is about to suffer
another crushing blow.  Asked by British journalists earlier this month about
the planned offensive, Baghdad's chief military spokesman, described it as "the
last kick of a dying mule." "We tell you confidently that Iran cannot do
anything against Iraq," added Mr Latif Nasif Jassem, the country's Information
Minister and a close confidant of President Saddam Hussein.

To some extent, the Iraqis are clearly whistling to keep their spirits up.  But
there are genuine reasons why they should be feeling more confident than they
did just a year ago.  In short, they have managed to convince themselves that
although they remain on the defensive and they recognise that they are operating
at a huge strategic disadvantage, the worse of the war is behind them.

1986 was a truly dreadful year for Iraq on every front.  On the ground, Iran
scored its most important military success by capturing the strategic Fao
peninsula and thus shutting off Iraq's sole outlet to the Gulf.  Politically,
the Iran-Contra affair came as a severe shock to Baghdad, which had been taking
comfort from the improvement in its relations with the US in the first half of
the 1980s.

Economically, there was a feeling that things were getting seriously out of
control.  The price of oil - source of more than 95 per cent of the country's
foreign exchange earnings - fell precipitously and the problem was exacerbated
by the drop of the value of the dollar since the bulk of Iraq's imports are
denominated in other currencies.  As a result, Iraq was forced to step up
military purchases at a time when it could least afford to.

The country's foreign debt spiralled - climbing perhaps as high as Dollars 60 bn
- and its creditors, often kept in the dark as to when they could expect to be
paid, became restive.  Civilian and development expenditure - one of the
instruments the Baghdad regime has used to keep its potentially fractious
subjects in line - suffered accordingly.

Iran's waves of attacks around Basra, Iraq's second city, in late 1986 and early
1987 were almost the last straw.  In January this year, Iranian forces were just
10 miles from the outskirts of the city.  Some Western observers suggest that
had Iran launched a further assault to the north or the south, Iraqi defences
would have collapsed.

Since then, however, several factors have worked in Iraq's favour:

On the battlefront, Saddam Hussein - who as president retains absolute civilian
control over the military - has instituted a thorough shake-up of the armed
forces.  After Iran's so-called Kerbala 4 and Kerbala 5 offensives, the army
chief of staff was sacked and a number of generals were shifted.  Western
military men in Baghdad believe that previously cumbersome lines of command in
the army have been streamlined, Iraq's ground forces have been regrouped and its
static defences bolstered.  All in all, Baghdad is reckoned to be in better
shape to resist that next Iranian onslaught than it was last winter.

Diplomatically, the Iraqi Government has been working overtime to enlist more
active support from other Arab states and from the wider international
community.  UN Security Council Resolution 598 - passed unanimously last July -
was a milestone in this regard.  So was the more or less solid Arab front
against Iran constructed at last month's Amman summit.

In addition, Baghdad - though an avowed apostle of non-alignment and a
significant client for Soviet weapons sales - has not bothered to disguise its
satisfaction at the Western naval build-up in the Gulf and its displeasure at
Soviet prevarication over the UN effort to end the war.  Since the apparently
mistaken Iraqi attack on the US frigate Stark last May, in which 37 American
sailors were killed, Iraq's long-standing aim of "internationalising" the
conflict has largely come to fruition.

After the follies of Irangate, the West has demonstrably come to realise the
pressing need at least to prevent an Iraqi defeat, which many other Arab rulers
fear might bring Ayatollah Khomeini's revolutionary message disturbingly close
to home.

The economic situation, too, has improved considerably over the last 12 months.
The oil price has (so far) stabilised, and production and exports have risen
dramatically.  In 1986, Iraq was pumping out an average of 1.7 m barrels a day
(b/d), and at times much less.  But now, thanks to the opening of a second
pipeline through Turkey, production is in excess of 2.8 m b/d - more than double
Iraq's Opec quota - and it is set to rise to exceed pre-war levels over the next
two years or so with the completion of a further Turkish pipeline and a second
one through Saudi Arabia.

Almost as significantly, President Hussein - or Saddam as he is universally
known - has this year taken a grip on the domestic economy, which suffers from
raw material shortages, poor management and labour rigidities.

Since the spring, he has put a new generation of well-qualified technocrats -
many of whom are incidentally close political associates - in charge of the key
economic and financial portfolios.  He has abolished trade unions in the public
sector and scrapped an entire tier of the bureaucracy running state industrial
and trading enterprises; he is trying to mobilise the substantial amounts of
private capital held by wealthy Iraqis for investment in agricultural and
service industries, and even partly to privatise companies such as Iraqi
Airways.  Price controls on staple goods have beeb lifted.  As a result, Iraq's
previously-high inflation rate has spiralled, but there already appears to have
been a dramatic improvement in supplies of such items as fruit and vegetables in
the shops - shortages had been a major source of glumbling previously.

"From now on," Saddam said in June, "the state should not embark on uneconomic
activity.  All officials must pay as much attention to economic affairs as to
political ideology."

Although the state is being left in control of such commanding heights as
foreign trade, banking and the oil business, this is undoubtedly a sea change
for what has been one of the most rigidly centralised economies in the Middle
East since the 1968 revolution by Saddam's Arab Baath Socialist Party.  It
amounts to an Iraqi version of perestroika (restructuring) - though without Mr
Gorbachev's glasnost (openness) - and reflects the pragmatism which the war has
forced the country's leaders to deploy in all fields.

At least some of these developments, though all forced by the Gulf war, may have
a significance which outlasts the conflict - a point which has not been lost on
Western governments aware of the post-war commercial potential of a country
which commands the second largest oil reserves in the world.

Nevertheless, it would be foolish to conclude from recent events that Iraq is
yet out of trouble.  Their effect has been to buy Baghdad a breathing space as
it prepares for the next Iranian onslaught.  Yet even if Saddam's forces succeed
in containing the attack, the long-term problems facing him remain horrendous.

In the first place, Baghdad is acutely aware that Iran remains well-placed to
continue prosecuting a war of attrition, for years if necessary.  Iraq's
population is only a third of Iran's; its major population and economic centres
(including the oilfields) are close to the Iranian frontier; and its financial
situation remains fragile, to say the least.  Iraq is essentially fighting the
war with one hand tied behind its back, forced in the word of Gen Moshen to
"economise on human resources." It simply cannot afford the heavy losses which
the Iranians appear prepared to pour into the fighting.  To underline Iraq's
demographic inferiority complex, Baghdad is plastered with anti-contraception
posters exhorting mothers to breed for their country.

Hence the importance of morale.  It is impossible to guage the true state of
Iraq's spirits this winter.  But it would be scarcely surprising if after seven
grinding years, war-weariness were setting in.  Few Iraqi families are not
directly touched by death.  Travellers outside Baghdad report that provincial
towns and villages are draped with black flags - the one officially permitted
sign of mourning.  Even in the capital itself, which has tried to maintain a
studied air of normality since the conflict began, it is commonplace to see the
wounded on crutches.

Bedhind the swaggering official statements, there are some disturbing
indications about military morale.  Desertion from the armed forces, for
example, is evidently on the increase; hundreds of deserters, possibly more, are
reported to have taken refuge in Iraq's southern marshlands.  This is despite
the fact that the penalties for dereliction of duty are ruthlessly harsh.  There
have been public executions of captured deserters in recent months, and in some
cases deserters have been shot in front of their families who have been forced
to pay for ammunition.

There is also cause for concern about the internal stability of a country which,
as much as any other Middle Eastern state, is a patchwork quilt of races and
religious factions.  Over the last year, Baghdad and other centres have
witnessed a mysterious series of bombings and shooting incidents.

In the mountainous north, the regime is faced with a troublesome insurgency by
the Kurds, who make up at least one fifth of Iraq's total population.  Diplomats
report that since last year, the two main Kurdish factions - the Patriotic Union
of Kurdistan and the Kurdish Democratic Party - have set aside their differences
and, with active Iranian assistance, are making significant inroads into Iraqi
control of the region.  Government forces have been behaving, in the words of
one observer "like an occupying army," razing villages to the ground and
forcibly transporting thousands of people to other parts of the country.

Apart from the fact that this constitutes a worrying distraction for an army
already stretched in confronting Iran in the south, the revolt also has an
important strategic dimension in that it is taking place not far from Iraq's
main oilfields and from the pipelines carrying its exports through Turkey.  As a
recent staff report prepared for the US Senate foreign relations committee put
it, "the situation in Kurdistan could prove the Achilles heel of Iraq's
defence."

All this is not to say that Saddam is losing his grip.  Far from it: the
predominantly Sunni Moslem ruling clique's control of Government is perhaps
tighter than ever, backed by a notoriously ruthless security apparatus; the
personality cult which the President cultivates remains all-pervasive; his
country's majority of Shi'ites has been largely quiescent, failing to respond to
the siren call of their co-religionists in Iran.

Indeed, it is arguable that the war has for the time being created a sense of
national identity that did not exist before.  The question which continues to
worry Western governments is how long Iraqi resolve can be expected to hold in
the face of a war, which, if Tehran has its way, could still drag on for years.

LANGUAGE: ENGLISH

GRAPHIC: Map, no caption; Picture President Saddam Hussein, his economic and
military reform mean that there are genuine reasons why the Iraqi people should
be feeling more confident about the war with Iran than they did just a year ago

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                        Financial Times (London,England)

                          December 17, 1987, Thursday

Former Reagan Aide Guilty Of Perjury

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 38

LENGTH: 365 words


Mr Michael Deaver, a former top White House aide and friend of President Reagan,
was convicted yesterday of committing perjury while denying charges of
improperly using his influence as a highly-paid Washington lobbyist.

Mr Deaver, 49, was found guilty on three charges of lying under oath to a grand
jury and a congressional committee investigating his activities.  He was
acquitted on two charges, but still faces a maximum of 15 years in prison and a
Dollars 22,000 (12,000 Pounds (pds)) fine.

Mr Deaver was one of Mr Reagan's closest aides as deputy White House chief of
staff before leaving in May 1985 to form a Washington lobbying company.  Within
months he was collecting six-figure retainers from clients, including the South
Korean and the Canadian governments, Rockwell International, the defence and
electronics group, Boeing, the world's largest aircraft manufacturer, and the
Phillip Morris tobacco company.

During his trial, a succession of senior Reagan Administration officials past
and present, including Mr George Shultz, the US Secretary of State, and Rear
Admiral John Poindexter, the President's former national security adviser,
testified on his behalf.

After 27 hours deliberation, a federal jury of seven women and five men reached
a verdict convicting Mr Deaver of violating the Ethics in Government Act.  It is
the first time the ethics law - which prohibits former top officials from
lobbying government for at least one year - has been used against a White House
official.

Mr Deaver, a confidant of the Reagans for more than 20 years, smiled sadly to
his wife in the Washington courtroom when the verdict was announced.  Sentencing
is expected next February.

Mr Deaver's last hope of a reprieve may rest with a legal challenge to the
constitutionality of the ethics law, which provides for a federal panel of
judges to appoint an independent prosecutor to investigate serious crimes by
senior federal officials.  The purpose of the panel is to avoid conflicts of
interest charges that might result if the US Justice Department conducted the
inquiry.

An independent counsel is similarly leading a criminal inquiry into the
Iran-Contra scandal.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          December 17, 1987, Thursday

Deaver Is Convicted On Perjury Charges

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 358 words


Mr Michael Deaver, a former top White House aide and friend of President Reagan,
was convicted yesterday of committing perjury while denying charges of
improperly using his influence as a higly-paid Washington lobbyist.

Mr Deaver, 49, was found guilty on three charges of lying under oath to a grand
jury and a congressional committee investigating his activities.  He was
acquitted on two charges but still faces a maximum 15 years in prison and a
Dollars 22,000 fine.

Mr Deaver was one of Mr Reagan's closest aides as deputy White House chief of
staff before leaving in May 1985 to form a Washington lobbying firm.  Within
months he was collecting six-figure retainers from clients including the South
Korean and Canadian governments, Rockwell International, Boeing and the Phillip
Morris tobacco company.

During his trial, a succession of senior Reagan Administration officials, past
and present, including the US Secretary of State, Mr George Shultz, and
President Reagan's former national security adviser, Rear Admiral John
Poindexter, testfied on his behalf.

After 27 hours deliberation, a federal jury of seven women and five men reached
a verdict convicting Mr Deaver of violating the Ethics in Government Act.  It is
the first time the Ethics Law - which prohibits former top officials from
lobbying government for at least one year - has been used against a White House
official.

Mr Deaver, a confidant of the Reagans for more than 20 years including the time
when Mr Reagan was governor of California, smiled sadly to his wife in the
Washington courtroom when the veridct was announced.  Sentencing is expected in
February.

Mr Deaver's last hope of a reprieve may rest with a legal challenge to the
constitutionality of the Ethics Law, which provides for a federal panel of
judges to appoint an independent prosecutor to investigate serious crimes by
senior federal officials.

An independent counsel is leading a criminal inquiry into the Iran-Contra
scandal.  On Tuesday, President Reagan signed a bill reauthorising the office
for another five years while expressing reservations over the consitutionality
of the law.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                           December 18, 1987, Friday

Bush Backed Iran Arms Sale Says Memo

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 36

LENGTH: 295 words


Vice-President George Bush supported the sale of arms to Iran to release
American hostages in Lebanon, according to a White House memorandum disclosed
yesterday.

The joint congressional committee investigating the Iran-Contra affair said the
memo was the first, albeit hearsay, evidence that Mr Bush backed the initiative.

Mr Bush's ambiguous role in the affair has been attacked by challengers for the
Republic nomination for next year's presidential election.  The disclosure
leaves Mr Bush, the Republican front-runner, vulnerable to further criticism.

Mr Bush has said he opposed swapping arms for hostages but has refused to
disclose his advice to the President on the 1985-86 arms shipments, citing the
need for confidentiality.

The Iran-Contra committee investigation ended last month with a 690-page report
critical of President Reagan and his aides.

A computer programme turned up 96 electronic White House messages including a
memo of February 1, 1986, by Read-Admiral John Poindexter, former national
security adviser.

This said: "Most importantly, President and VP (Vice-President) are solid in
taking the position that we have to try."

The memorandum ties Mr Bush to what many consider the essence of the scandal -
selling arms to Tehran even though the US had claimed Iran was sponsoring
terrorism.  Mr Bush chaired an inter-governmental task-force on terrorism in
1986 which recommended halting the flow of arms to terrorists.

However, the memo does not tie Mr Bush to the diversion of profits from the arms
sales to the Nicaraguan Contra rebels during a congressional ban on US aid.

The diversion scheme and the shredding of hundreds of documents by Admiral
Poindexter and Lt Col Oliver North are the subject of a criminal inquiry.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          December 19, 1987, Saturday

Bush Denies Iran-Contra Allegations

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 215 words


US Vice President George Bush, frontrunner for the Republican presidential
nomination, yesteray denied there was "anything new" in a White House memorandum
stating he backed the arms-for-hostages deal with Iran.

In an attempt to defuse a threat to his campaign, Mr Bush issued a statement
saying the memo was consistent with earlier ones about his role. His spokesman
said: "He supported the effort to free our hostages and he supported the
president's initiative despite some reservations."

However, one of his Republican challengers, Mr Alexander Haig, seized on the
disclosure made on Thursday by the joint Congressional committee investigation
of the Iran-Contra affair, "Clearly, George Bush has a credibility crisis on
this issue," said Mr Haig.

While most of the steam has gone out of the affair, publication of the memo ties
Mr Bush more closely than before to what the American public regards as a
monumental foreign policy blunder.  Mr Bush's trumpeted strengths are experience
and good judgment in government.

Separately, the CIA director Mr William Webster has announced a disciplinary
shake-up in the wake of the Iran-Contra affair.  Two field officers have been
fired, one senior officer has been demoted, and several others reprimanded for
improper conduct.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            January 11, 1988, Monday

Son Of The Soil Taunts Silver-Spoon Sophisticate Bush

BYLINE: Stewart Fleming, US Editor, Carlisle, Iowa

SECTION: SECTION I; Back Page; Pg. 34

LENGTH: 765 words


Class conflict has broken out on the American Presidential election campaign
trail.

The feud is not between Democrats and Republicans but within the Republican
Party.  It involves the two front runners, Vice President George Bush, the
privileged son of a New England investment banker and US Senator, and the man
who has emerged as his strongest challenger for presidential nomination, Senator
Robert Dole.

In Iowa over the weekend each has been busy undermining the image the other is
trying to build.  In four weeks the state will be the first test of what the
voters think.

Listen for example to Senator Dole, who grew up dirt poor in a tiny midwestern
farming community.

"I am from Russell, Kansas and I am proud of it," he told an audience of about
50 crammed into the American legion post in Carlisle, a village of about 5,000
people.  "I did go to public (state) schools and I am proud of it."

There is nothing complicated about Bob Dole.  "I believe I have small town
traditional values and Washington experience," he says, adding that when he
becomes President and picks a team to run the Administration, "we are going to
look for people who want to serve their country - and they don't have to be rich
either."

He says he got into politics "almost by accident" adding, in a barbed aside
directed at Mr Bush, "not because it was in the family or we were looking for
power."

Iowa's caucuses are seen by all 13 presidential candidates as crucial.  In
Senator Dole's case a poor showing could again shatter his ambitions as in 1980.

So it is not surprising that he is emphasising his farm state roots in
neighbouring Kansas, and laying himself open to the jibes of Bush campaign
workers that his campaign looks as if he is running for Governor of Iowa, not
President of the United States.

But there is more to the Dole strategy than regional appeal.  One of Vice
President Bush's weaknesses, a serious one in a year when voters say they want
to get behind television images and to grips with the character of the
candidates, is that he has high name recognition but a fuzzy image.

The problem of being number two in the White House partly explains this.  But it
is aggravated by uncertainty in the public mind not only about what the Vice
President stands for but, in an odd way, where he is from.

Is he the tough self-made Texan he says he is?  Or, as Mr Dole implies without
ever mentioning his name, the upper class New England "preppie" who went through
some of the best private education America can offer before finishing school at
the prestigious Yale University.

The Vice President counters by insisting that he really does stand for
something: "I want to be the education President," he says as he flies around
the country in Airforce Two, trying to create the impression that he is the
natural inheritor of the presidency.

In televised debates between the candidates such as in Des Moines on Friday, he
never misses a chance to present himself as "fightin' George Bush," a man who
can hit back hard at rhetorical challengers, especially those who keep asking
him what he was doing during the Iran-Contra affair.

So Senator Dole's approach, real resentment in his voice when he addresses the
theme, is to suggest that the Vice President, born with a silver spoon in his
mouth, cannot understand the problems of ordinary Americans and, by implication,
does not have the regional roots and values Americans like their presidents to
have.

This strategy does not seem to be working badly.  Some polls, including one from
CBS-New York Times published last week, show that although Mr Bush remains the
front runner nationally, Senator Dole has built up an impressive lead in Iowa.

Among voters who said they would definitely or probably attend next months
caucuses, 41 per cent supported Senator Dole, compared with 21 per cent for Vice
President Bush.  Polling data for caucus states, where voters have to spend an
evening discussing their votes and do not just pull a voting machine lever, are
potentially unreliable however.  Getting the vote out is crucial.

Vice President Bush is hitting back of course.  This weekend, for example, he
has begun to call for candidates to disclose their tax returns for the past ten
years, something which the Bush organisation believes could puncture Senator
Dole's man of the people image.

Newspaper reports have suggested that the Senator and his wife might have had a
Dollars 500,000 income last year.  The Doles live in the plush Watergate
appartment building in Washington and have an expensive Florida home.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          January 13, 1988, Wednesday

Arms Scandal Throws Bush On Defensive

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 338 words


Vice-president George Bush has been thrown on to the defensive in his campaign
for the Republican Party's Presidential nomination by questions about his role
in the Iran/Contra arms for hostages scandal last year.

Last Thursday, on the eve of the first full-scale debate among the Republican
candidates in Iowa, which on February 8 sees the first real test of American
voters' perceptions of the 13 candidates from the Republican and Democratic
parties, the Washington Post published an analysis of what is known about Mr
Bush's involvement in the scandal.

Although the report contained no startling revelations, Mr Bush found himself
hounded in spite of his efforts to put the issue to rest by challenging
reporters to put to him any questions which they believe he has failed to
answer.

Mr Bush's efforts, which have included an attack on the Iowa newspaper, Des
Moines Register, and an attempt to make an issue out of Senator Robert Dole's
wealth, his wife's finances and campaign ethics seem to have failed.

On Monday, Mr Bush's involvement in Iran/Contra was again on the evening
television news programmes.  During the day Mr Bush had spent four hours
responding to questions on Iran/Contra under oath.  Following the meeting Mr
Bush's spokesman said that "all questions were answered completely, fully under
oath."

While it is evident that most Americans are no longer interested in the
Iran/Contra scandal, it is still potentially damaging to Mr Bush.  His public
position has been that he had reservations about arms sales to Iran but learned
belatedly about many details.

Rivals for the Republican nomination such as General Alexander Haig point out
that, if he did not know, how could he claim to have been a "co-pilot" at the
controls of the Reagan Administration.  Alternatively, if he had reservations
why, if he was so influential, did he not express them strongly in the way Mr
Caspar Weinberger, then Defence Secretary, and Mr George Shultz, Secretary of
State did in late 1985 and early 1986.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            January 15, 1988, Friday

US Eyes Israel's 'Deadly Embrace'

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1044 words

HIGHLIGHT:
Lionel Barber reports on public response to events in Gaza


The recurrent violence in the Israeli-occupied West Bank and Gaza Strip has
become a familiar if depressing image on the American TV screen.  Scarcely a
night passes without an earnest anchorman reciting the latest Palestinian death
toll or TV footage appearing which, more often than not, points the finger of
blame at Israeli soldiers.

The damage wrought by this pictorial bombardment has not been lost on the
Israeli Government, which has finally sought to curb the cameras, official
protests notwithstanding.  Of more immediate interest to Israel is whether the
overwhelmingly negative images of the last month will prove more than a
short-term public relations disaster in the US, which remains its closest ally.

Thoughout the past 30 years, public opinion in the US has been notably
consistent in its sympathy for Israel: the image of a beleaguered, democratic
state - "the island of courage in a sea of aggression" - has proved remarkably
resilient.  Support for Israel has assumed permanency in the US foreign policy
consensus.

That support in turn has been sustained by America's Jewish community which,
through its cohesiveness and dynamism, has successfully promoted the cause of a
Jewish homeland in Palestine free from Arab aggression.  How the events in the
occupied territories play out in the internal debate among America's Jews could
therefore have an impact on public opinion and US policy.

Even before the Palestinian riots erupted, several prominent Jewish leaders had
publicly voiced doubts about the Israeli Government's policies in the occupied
territories.  Last September, for example, the American Jewish Congress urged
Jerusalem to consider new formulas for ending rule of the territories.  "We see
it as a 'deadly embrace,'" said Mr Henry Siegman, executive director of
Congress.

Mr Siegman regards the Gaza uprising as a phenomenon quite unlike the PLO-backed
terrorist acts which have aroused sympathy for Israel in the past.  "Israel has
not dealt with this sort of open revolt before ...  it is clear that the
continuation of the status quo is going to exact a horrendous price."

Like several other liberally-inclined American Jewish leaders, Mr Siegman
supports the forum of an international peace conference to try to settle the
problem of the West Bank, Gaza and a Palestinian homeland.  Mr Siegman predicts
that the current violence will increase American Jewish pressure for such a
conference - which is backed by Mr Shimon Peres, the Israeli Foreign Minister,
but rejected by Mr Yitzhak Shamir, the Prime Minister - and he forecasts a
future trip by American Jewish leaders to Israel to press this point, albeit
when the rioting has died down.

Mr Norman Podhoretz, editor of the conservative magazine Commentary and a
prominent American Jewish thinker, is less convinced of the pressure for
withdrawal from the territories.  By his calculation, some 15 per cent of the 6
m American Jews are "very critical" of Israeli government policy and this is
unlikely to increase.  But he concedes: "Because the Israeli Government itself
is split on what to do, people here (in the US) are uncertain and confused."

Little of that confusion, however, has rubbed off on the Reagan Administration
which has actively strengthened ties with Israel over the past four years and
shows no signs of shifting gear.  Only last week, Mr George Shultz, US Secretary
of State, pronounced the alliance "unshakeable."

During the Reagan presidency, the US has converted what used to be a mix of
commercial loans and financial grants into simple grants worth some Dollars 3 bn
this year.  Included in this chunk of foreign aid, by far the biggest for any US
ally, is some Dollars 1.8 bn of military sales credits (1981 aid was Dollars 500
m in grants, Dollars 900 m in loans).  Meanwhile, it has almost doubled economic
aid to Dollars 1.2 bn since 1980.  Last month, it signed a new arms pact giving
Israel more latitude to sell its weapons in the US.  "Ronald Reagan has elevated
Israel from client state to strategic ally," says an Israeli supporter in
Washington.

This strengthening of ties is the more remarkable in the light of two major
controversies which threatened to sour relations between the two countries: the
Iran Contra affair and the arrest in November 1985 of Jonathan Jay Pollard, a
former US Navy intelligence analyst who confessed to funelling secrets to Israel
for cash.  The spy case was described by the former US Defence Secretary Mr
Caspar Weinberger as a devastating piece of treachery.

The Iran-Contra scandal prompted Mr Weinberger (and, in veiled terms, Vice
President George Bush) to criticise the way the US allowed itself to be
persuaded by Israel to sell arms to Iran in return for American hostages.  But
the silence on this aspect of the affair, compared with the noise generated by
Mr Bush's own role, has been deafening.

President Reagan and Mr Shultz have refused to be deflected from their strategic
goal of co-operation with Israel as an anti-Soviet ally in the Eastern
Mediterranean.  This fundamental reality inevitably overshadows the occasional
public criticism or the latest vote against Israel in the United Nations on the
planned deportation of Palestinians suspected of instigating unrest in the
territories.

Two factors could alter the status quo.  One would be the possibility of
credible negotiations with an Arab leader such as King Hussein of Jordan.  Many
observers believe such an opportunity was presented by the international
conference proposal, though the US support for this idea was at best lukewarm in
view of the divisions it aroused within the Israeli coalition Government.

The historic post-war low for Israel's support among the American public was in
1978-79 when President Sadat of Egypt appeared on US television to sell the case
for reconciliation, a process which eventually led to the Camp David accords
(and his own assassination).

The other change could occur with a new US president.  In the election campaign
so far all candidates (other than the pro-Arab Democrat Rev Jesse Jackson) have
avoided the Israeli question.  "There is simply nothing to be gained by
attacking Israel because you have to have an alternative," said one Capitol Hill
analyst.

LANGUAGE: ENGLISH

GRAPHIC: Picture Young Palestinians show V for victory during the visit of Mr
Marrack Goulding, a UN official, to the Gaza Strip

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                        Financial Times (London,England)

                           January 19, 1988, Tuesday

Bush Slips Further Behind In Iowa Polls

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 302 words


US Vice President Mr George Bush is slipping further behind in the polls in Iowa
where voters kick off the presidential nomination race in three weeks times.

A spate of recent surveys show Mr Bush, the man to beat in the Republican race,
is trailing the Senate Republican leader Mr Robert Dole by up to 15 points in
Iowa.

Election analysts say Mr Bush is being hurt by the weak farm economy, the budget
deficit, and the continuing controversy surrounding his role in the Iran-Contra
affair.

These negative factors are undermining what in other states is seen as Mr Bush's
greatest strength, his close association with President Reagan.  Polls in Iowa
show a high disapproval rating of the President.

Mr Bush still enjoys a big lead in national opinion polls.  His well-organised,
well-financed national campaign makes him the Republican frontrunner.

However, a defeat for Mr Bush in Iowa, where voting takes place on February 8,
would be an early blow which would dramatically increase the pressure to do well
in the New Hampshire primary eight days later.

A Time magazine poll at the weekend showed half of Iowa's Republicans favoured a
change of policy direction after the Reagan presidency.  A recent New York
Times/CBS survey said 25 per cent of the state's Republicans are dissatisfied
with Mr Reagan.  Senator Dole has a two-to-one lead among those who are
dissatisfied with the President.

An NBC News/Wall Street Journal poll showed that the Iran arms sale will
influence the voting decisions of about half of Iowa's Republican voters.  This
appears bad news for Mr Bush because a majority of voters believe he has not
given a full account of his role in the affair.

The Iran-Contra scandal has hurt Mr Bush because he has been unable to shake
free of the persistent press questioning.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                          January 20, 1988, Wednesday

Bush Faces The Evangelists;
Dole And Robertson Score Well In Iowa Caucus Opinion Polls

BYLINE: Stewart Fleming, Sioux City, Iowa

SECTION: SECTION I; American News; Pg. 4

LENGTH: 436 words


Vice President George Bush's prospects of winning the Republican Party's Iowa
caucuses on February 8 and so laying a solid foundation here for the party's
presidential nomination are being increasingly discounted here following the
publication earlier this week of the latest Iowa poll.

The poll showed that Mr Bush is now trailing Senator Robert Dole by a wider
margin among voters who say they intend to go to the caucuses compared with the
previous poll at the end of last year.  It also showed that Reverend Pat
Robertson, the former television evangelist, appears to be gaining support,
spurring speculation that he could come in a strong third behind Mr Bush and Mr
Dole.

Mr Dole has moved into a commanding lead among Republican prospective caucus
goers in caucuses which are universally recognised as the first major test of
voter preferences in the contests for the Republican and Democratic parties'
presidential nominations.

The poll shows Mr Dole from the neighbouring state of Kansas with a lead of 41
per cent to 26 per cent over Mr Bush who appears to have been damaged by
continuing questions about the role he played in the Iran-contra arms scandal.
It is now almost two weeks since a new bout of speculation about the advice Mr
Bush was offering to White House officials in the Iran-contra affair.

As striking as the 9 percentage point decline in support for Mr Bush since the
last poll is the increase in support for Mr Robertson who arrived in Sioux City
on Monday night on the first leg of a 600 mile two-day bus tour of Iowa during
which he expects to address rallies in 27 different towns.

Mr Robertson has moved up to third place in the poll displacing Representative
Jack Kemp, another conservative who is vying with Mr Robertson for support
amongst fundamentalist Christians as well as right-wing Republicans.

Mr Robertson's brand of populist religious nationalism is being greeted with
enthusiasm by many in the audiences he addresses.

In an effort to demonstrate his stength his campaign organisers have been
calling on his supporters to attend these rallies which are thus being turned
into something of a trial run testing the ability of his Iowa organisation to
turn out the vote.

Their success has been mixed, however.  At some stops 100-150 have turned out to
greet him, numbers which in the context of a campaign which is only expected to
engage at most 150,000 Republicans in the statet, are significant and certainly
the equal of the crowds being drawn by Senator Dole and Mr Bush.

But at other small towns on his route crowds of only 20 to 30 have showed up.

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                        Financial Times (London,England)

                            January 25, 1988, Monday

Reagan To Push Contra Aid In Union Address

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 500 words


President Ronald Reagan is expected to try to rally support for his foreign
policy priorities in his final State of the Union address to Congress tonight,
as he searches for ways to continue to play an influential role in the political
life of the country in his last year in office.

Mr Reagan, who will this week ask Congress for new funds to back the Contra
rebels in Nicaragua, is expected to use the State of the Union address to try to
put pressure on reluctant Democrats to support a scaled-back Contra aid package.

He is also expected to express his determination to press ahead with the arms
control negotiations with Moscow which have won wide public support and helped
revive his prestige - at the end of a year of political reverses ranging from
the Iran/Contra scandal to the failure to win the appointment of the
conservative Judge Robert Bork to the Supreme Court.

In a weekend radio address, Mr Reagan described the first fruits of his arms
control efforts, the Intermediate Nuclear Forces Treaty signed last month in
Washington, as "solid." It now faces three or more months' scrutiny in the US
Senate which has the constitutional right to approve or disapprove.

The hearings which Senate committees will hold to examine the terms and
longer-range implications of an INF accord, which calls for the elimination of
medium-range nuclear missiles from the world's arsenal of nuclear weapons, will
open today.  Medium-range missiles are only a small proportion of the
superpowers' nuclear armoury.

The US Secretary of State, Mr George Shultz, is expected to be lead-off witness
for the Reagan Administration before the Senate Foreign Relations Committee.
The Senate Armed Services Committee, headed by Senator Sam Nunn of Georgia, will
also hold parallel hearings with Mr Frank Carlucci, the Defence Secretary, as
lead-off witness.

Senator Nunn has said he will use the hearings to examine the treaty-making
process and the conventional military as well as the strategic implications of
the INF treaty.  A group of conservative Senators numbering, according to some
estimates, 15 to 20, either opposes the accord or important elements of it.

Some are expected to propose amendments or reservations to the treaty aimed
either at killing it or slowing the pace of arms control negotiations at a time
when the Administration is pressing ahead with its ambitious goal of achieving
an agreement for 50 per cent cuts in long-range strategic missiles.

In spite of conservative opposition, Senate leaders are estimating they can
command the two-thirds majority needed to approve the treaty.  Whether or not it
will emerge without amendment, remains unclear.

The New York Times reported yesterday that in a legislative message accompanying
the State of the Union address, Mr Reagan will ask Congress, among other
matters, to reduce the rate of capital gains tax, expand the funding for Federal
prisons, and approve a more aggressive programme for the sale of public housing.

LANGUAGE: ENGLISH

GRAPHIC: Picture Reagan, looking for backing on foreign policy

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                        Financial Times (London,England)

                          January 27, 1988, Wednesday

Boost For 'Wimp' Bush After TV Shouting Match

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 446 words


US Vice President George Bush may finally have buried his "wimp" image.

During a nine-minute shouting match with CBS evening news anchorman Mr Dan
Rather, Mr Bush accused the network of staging the live interview under false
pretences by turning a campaign profile into a cross-examination on the
Iran-Contra scandal.  CBS denied this and said Mr Bush was forewarned of a tough
interview.

Some 16 m Americans watched the confrontation on Monday night.  Thousands
yesterday deluged CBS with complaints about Mr Rather's hectoring manner and
expressed support for the Vice President.

Coming less than two weeks before the Iowa presidential caucuses - the first
real test of the campaign - the rumpus may give Mr Bush, the Republican
frontrunner, a short-term boost.  But it spotlights the Vice President's
difficulties in escaping questions about his role in the arms-for-hostages
dealings with Iran.

The confrontation began after a six-minute taped report narrated by Mr Rather
and viewed by Mr Bush on a monitor in his Senate office.  The report suggested
Mr Bush had not been candid about his role in the covert supply of arms to the
Nicaraguan Contra rebels and the sale of arms to Iran.

Mr Bush said: "I thought this was a news programme.  You've impugned my
integrity."

Mr Rather responded: "One third of Republicans in this poll ...  believe you're
hiding something."

As the two men jousted, Mr Bush, whose preppy image dogged him in the 1980
presidential campaign when he lost to Ronald Reagan, stunned Mr Rather by saying
the emphasis on Iran-Contra was no fairer than judging the anchorman by his
walkout last year from a CBS studio which left the network blank for six
minutes.

Mr Rather hit back: "You have made us hypocrites in the face of the world," he
declared, before pulling the plug on Mr Bush to make room for commercials.

TV commentators judged Mr Bush a clear winner.  Mr Tom Shales of the Washington
Post said of Mr Rather: "Cries for his scalp may become deafening." Mr Bush
boasted to campaign staff: "The bastard didn't lay a finger on me."

Mr Rather - who is reputedly paid Dollars 3 m a year - succeeded Mr Walter
Cronkite in 1981 as CBS Evening News anchorman.  His aggressive style has led to
a stormy career.  Last year, his programme fell to third place, scored its
lowest ratings ever, and the news division was subject to budget cuts and
firings.

Mr Rather's emotional, hostile performance is likely to undermine the networks'
claim to objectivity at a time when they are facing competition from other
electronic media.  The politicians too are likely to renew efforts to set tough
conditions before appearing on the air.

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                        Financial Times (London,England)

                           January 28, 1988, Thursday

Cheer In Bush Camp Over Television Clash

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 227 words


The political advisers of Vice-President George Bush claim that his
confrontation on Monday with Mr Dan Rather, the CBS Television news anchorman,
was a "defining moment" which has galvanised his campaign for the Republican
Party's presidential nomination.

On Tuesday night CBS reported on the fall-out from the interview. Mr Rather
defended his aggressive questioning of Mr Bush, during which Mr Bush fiercely
attacked both the CBS network and the anchorman himself for incessantly focusing
his questions on the Vice-President's role in the Iran/Contra scandal.

Analysis is focusing on whether Mr Bush was "ambushed" by Mr Rather or whether
he deliberately walked into the CBS interview looking for a fight with a
reporter known for his aggressive questioning to prove that he is not the
spineless politician his critics say.

In either case Mr Bush is seen to have emerged as the winner.

He has shored up his support among Republican conservatives for whom CBS News
and Mr Rather in particular are anathema.  This is an important advance with the
Iowa caucuses, the first real test of appeal of the Presidential candidates
among party loyalists, only 12 days away.  Mr Bush is trailing his main rival,
Senator Robert Dole, in the polls.

However, the interview has continued to focus attention on Mr Bush's involvement
in the Iran/Contra affair.

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                        Financial Times (London,England)

                            January 29, 1988, Friday

Bush Faces Renewed Attack Over Arms Deal

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 228 words


Several of the leading candidates for the Democratic Party's Presidential
nomination turned their fire away from each other yesterday and in the direction
of Vice-President George Bush, the front-running Republican.

They charged that Mr Bush had still not answered key questions about his role in
the Iran/Contra arms scandal.

They were joined by Mr Lee Hamipton, a Democratic Representative and the
chairman of the House committee which investigated the Iran/Contra scandal, who
said "the position of the Vice-President remains unclear with respect to the
sale of arms to Iran and until it is clear I think it will continue to be an
issue."

In an angry confrontaton on US television on Monday night Mr Bush sought to put
the issue of his involvment in the Iran contra affair behind him and to
demonstrate that he is a tougher politican than many Americans believe by
rounding on Mr Dan Rather, the CBS television anchorman, and accusing him and
the TV network of distorting his record.

The encounter is widely seen to have helped improve Mr Bush's image among
Republican voters.

But yesterday Senator Albert Gore, Senator Paul Simon and former Senator Gary
Hart, all took aim at Mr Bush and suggested that the Vice-President is not going
to find it easy to stem the continuing flow of questions about the decisions he
took on the Iran/Contra issue.

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                        Financial Times (London,England)

                           January 30, 1988, Saturday

TV Anchorman Who Lost His Grip Lets Bush Off The Hook

BYLINE: Lionel Barber

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 889 words

HIGHLIGHT:
Lionel Barber profiles Dan Rather, America's most controversial television
newsman


Tightly-wound and invariably intense, Mr Dan Rather is the most highly-paid, the
most closely-watched and the most frequently-criticised TV news anchorman in
America.

Every weekday, in his halting Texan tones, he presents the CBS evening news, a
high-speed 22-minute broadcast watched by 16 m viewers across the nation.  On
Monday night, this human pressure cooker blew.

Mr Rather's nine-minute shouting match with Vice President George Bush left him
branded a bully and a boor, and the American people no wiser as to the Veep's
role in the Iran-Contra scandal.  Dan Rather has probably nominated the next
Republican candidate and may even have elected the next President, lamented the
syndicated columnist Mary McGrory.

In a vast country united by the small screen, it is not surprising that
Americans tend to elevate their anchormen to a position somewhere close to God.
At CBS, one of the nation's three networks, this is almost inevitable.  The
company's history is studded with great names: Ed Murrow, Charles Collingwood,
and the majestic Walter Cronkite who seemed at times to speak to world leaders
like Anwar Sadat and Menachim Begin almost as an equal.

Anchormen, says Mr John Chancellor of rival NBC and a former occupant of the
hot-seat himself, are like the typeface of a newspaper; reporter, editor and
presenter combined, they define the identity of the product.  Dan Rather, to
extend the metaphor, has always cast himself in big bold headlines.

A ditchdigger's son from the oilfields of east Texas, he tried to get to college
on football - and failed.  With few cents and a heap of odd jobs behind him,
including part-time announcing work at a radio station in Huntsville, Mr Rather
eventually made his name, fittingly, in a storm - Hurricane Carla - which hit
the Texas Gulf coast in the autumn of 1961.

Mr Peter Boyer of the New York Times and author of "Who Killed CBS" describes in
his book how the young reporter persuaded his station manager to set up a camera
crew and correspondent in Galveston, where the storm was soon likely to break.
CBS noticed Mr Rather who, in Mr Cronkite's words, was "ass-deep in water
moccassins", and offered him a job as network reporter.

He held out for the position of network correspondent, and never looked back:
the Kennedy assassination (when he scored a 17-minute lead over his competitors
on the president's death), White House correspondent, Vietnam, London (once
Murrow's famed beat), and a second tour of the White House where, until last
Monday, he enjoyed his most celebrated encounter.

It was at the height of the Watergate scandal.  Mr Rather had been peppering
President Nixon with questions until finally Nixon asked the TV reporter if he
was running for office.  Mr Rather shot back: "No, Mr President, are you?"

Mr Rather set the tone for future reporting in the Rose Garden and the Briefing
Room.  In the Reagan presidency, his kindred spirit is the ABC correspondent Mr
Sam Donaldson whose taunts, barbs and talent in front of the camera have turned
him into a millionaire too.

In 1981, Mr Rather accomplished what some in the TV profession believed to be
impossible.  He succeeded Walter Cronkite.  And while the transition was far
from easy, the ratings, the all-important barometer for advertisers, recovered
and the CBS Evening news became the cash-cow of old.  Mr Rather's salary package
amounted to some Dollars 22 m over 10 years.

Last year, however, the glamour began to fade.  The new chairman and chief
executive at CBS, an astute cost-cutter called Mr Larry Tisch, chopped 10 per
cent of the news division's budget (which, admittedly, had balooned from Dollars
80 m to Dollars 300 m in eight years).  Some 215 of Mr Rather's colleagues were
sacked, despite his own public protests.

Last year, Mr Rather admitted in a recent interview, he hit an all-time low: his
newscast fell to third place, scored the lowest ratings ever, and he was heavily
censured for walking off the air when he thought, mistakenly, that a tennis
broadcast would cut into his news programme.  CBS was left with six minutes of
dead air.

The Bush interview was billed big - which makes the Vice President's claim that
he did not know what was coming disingenuous.  In fact, both men went on the air
with their guns loaded.

The shoot-out at what the Vice President later called Tension City was largely
caused by a six-minute report, narrated by Mr Rather, which cast doubt on Mr
Bush's claims not to have known about the arms-for-hostages dealings with Iran.
Mr Bush drew first, and the resulting explosion made television history.

Since television history often ends up on the cutting room floor, such claims
may not amount to much.  What is undisputed is that Mr Rather mishandled the
interview.

Mr Fred Friendly, a former CBS news president and now professor of journalism at
Columbia University in New York, says Mr Rather and his CBS producer team
compounded the error by agreeing to Mr Bush's demands for a live interview.

Mr Bush's victory may only be Pyrrhic: the news media continue to bore away at
the details of the Iran-Contra scandal.  Mr Bush's campaign may receive a short
term boost from conservatives who have traditionally targeted Mr Rather and CBS
as a liberal double-act, but he cannot press-bash his way to the nomination.

LANGUAGE: ENGLISH

GRAPHIC: Picture George Bush, Pyrrhic victory

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                        Financial Times (London,England)

                            February 1, 1988, Monday

Meese 'Knew Of Plan To Bribe Top Israeli Official'

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 417 words


The US Attorney General, Mr Edwin Meese, knew of a plan to bribe a top Israeli
official in connection with a Dollars 1 bn Iraqi pipeline project and did
nothing about it, according to newspaper reports in Washington.

They said Mr Meese was sent a memo by a close friend and business associate who
suggested buying off Israeli opposition to the project, now the subject of an
investigation by a court-appointed special prosecutor.

The White House chief of staff Mr Howard Baker said yesterday President Reagan
had full confidence in Mr Meese and had no plans for him to step aside during
the special prosecutor's investigation.  Lawyers for Mr Meese have denied any
wrong-doing.

Mr Meese - the country's top law enforcement officer - has been dogged by
controversy since he took office in 1985.  His preliminary probe into the
Iran-Contra arms scandal prompted harsh censure by a joint congressional inquiry
last year; recently he has had to excuse himself from numerous cases because of
potential conflict of interest arising from the special prosecutor's
investigation.

The reports said Mr Meese was sent a memo by his former lawyer and long-time
associate, Mr E Bob Wallach, who was seeking US Government support for the Iraqi
pipeline project in 1985.  The memo, the existence of which was disclosed last
Friday in the Los Angeles Times, apparently referred to a plan to bribe a senior
official to help prevent Israeli attacks on the pipeline.

At the weekend, a spokesman for Mr Shimon Peres, Israel's Foreign Minister and
then Prime Minister, denied that Mr Peres was offered or received a bribe.  He
confirmed, however, that Israel - a long-time enemy of Iraq - had given
assurances not to interfere with the proposed 540-mile pipeline.

According to detailed press reports in the New York Times and the Washington
Post, Mr Meese knew about the bribery plan and took no action.

The 1977 Foreign Corrupt Practices Act generally prohibited companies and
individuals from making payments to foreign officials to secure help in
"obtaining or retaining business."

The New York Times reported yesterday that Mr Meese played an "important and
sustained role" in promoting the pipeline project which was to run close to the
Israeli border.

A special prosecutor investigation of Mr Meese began last May, growing out of a
separate inquiry into efforts by Mr Wallach and the US Attorney General to help
a small New York engineering company, the Wedtech Corporation, win federal
contracts.

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                        Financial Times (London,England)

                           February 2, 1988, Tuesday

Edwin Meese's Ethics Again Put Under Scrutiny

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 644 words


Reports that Mr Edwin Meese, the US Attorney General, knew of a proposal by his
close friend Mr Robert Wallach to make possibly illegal payments to the Israeli
Labour Party, have raised renewed questions about the ethics of a man whose
financial affairs have been under continual official investigation since he left
the White House to head the Justice Department in 1984.

Mr Wallach reportedly wrote a memo to Mr Meese outlining the proposal to make
the payments, a copy of which was found in Mr Meese's files.

The questions about Mr Meese's role in efforts in 1984 and 1985 to put together
a private consortium to build a Dollars 1 bn pipeline from Iraq to the Jordanian
port of Aqaba are said to have become a "focal point" of an investigation of Mr
Meese by a government appointed independent counsel, Mr James McKay.  Mr Howard
Baker, the White House Chief of Staff, has confirmed that he was briefed about
the investigation by Mr McKay last week.

The reports, which have been front page news in leading US newspapers for the
past three days, have raised again the question of whether or not Mr Meese will
resign.  He is now the last of the friends and associates President Ronald
Reagan brought to Washington with him from California and put into top jobs in
his new administration in 1981 and few observers expect him to quit soon.

His lawyers are saying that "no actual or potential violation of the law" was
brought to his attention, and Mr Reagan is continuing to express confidence in
him.

Mr Baker argued at the weekend that for Mr Meese to resign on the basis of
newspaper reports would be like "pitching people to the lions without proof ...
I see no reason for the President to take any action unless and until it is made
to appear that Mr Meese has done something wrong," he said.

That said, it is clear that the new questions that are being raised about Mr
Meese's judgement will be a source of concern to the Republican Party.  Highly
publicised trials of Government officials, including the perjury conviction in
December of former top White House aide Mr Michael Deaver, have made Republicans
vulnerable to Democratic charges that the Reagan Administration has paid too
little attention to honesty in Government and made "sleaze" an election issue.
(Mr Deaver has not been sentenced and is appealing against the conviction.)

The new reports about Mr Meese, however, could provide Democrats with ammunition
for a broader attack on the Reagan Administration.  Parallels are being drawn
for example between the Iran/Contra scandal which undermined President Reagan's
credibility last year and the efforts by Mr Meese's associate Mr Wallach to
promote the construction of the oil pipeline between Iraq and Jordan.

Among the parallels, which Mr Baker described on Sunday as "intriguing" are the
mingling of private business and American foreign policy considerations in a
venture in a highly sensitive area of the world.

The reports allege that businessmen involved in promoting the venture tried to
use their contacts in the US Government (notably Mr Meese) to help them
circumvent the normal channels of decision-making and involve the National
Security Council in their efforts to get US government support for the plan.

Mr Baker said on Sunday that he had "no concrete evidence that the Israelis were
manipulating our foreign policy."

The Republican Party will have no desire to see these issues, and the parallels
with the Iran/Contra affair, debated in public, although such a debate might be
more damaging to some Republican presidential candidates, notably Vice President
George Bush, than others.

Mr Bush's role in the Iran/Contra scandal is an issue which is dogging his
campaign.  The Democrats for their part will be watching closely to see how the
independent counsel's investigation of Mr Meese now evolves.

LANGUAGE: ENGLISH

GRAPHIC: Picture Edwin Meese, last of Reagan cronies

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                        Financial Times (London,England)

                            February 5, 1988, Friday

Reagan Vows To Continue Fight For Contra Aid

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 621 words


President Ronald Reagan yesterday vowed to continue fighting for aid to the
Nicaraguan Contra rebels and blasted the House of Representatives for cutting
off US funding.

Mr Reagan, grim-faced as he left a religious assembly, was asked what he
intended to do for the Contras after Wednesday night's narrow defeat in the
House of Representatives.  "Help 'em," he replied.

The White House's options are limited because, under House rules, the defeat
removes any guarantee of a further Congressional vote on Contra aid, the issue
which Mr Reagan has made a bench-mark of his presidency.

President Reagan's chief spokesman, Mr Marlin Fitzwater, said the House vote
"undercuts the efforts of those brave (Contra) men and women at a critical
juncture in the Central American peace process."

He indicated that Mr Reagan intends to hold Congress's hand to the fire,
pressuring lawmakers to determine if the Sandinista government is complying with
the regional peace plan, which calls for an end to foreign aid to insurgents and
democratic reforms.

In Nicaragua, President Daniel Ortega said the 219-211 vote rejecting President
Reagan's request for Dollars 36.2 m in new aid - including a token Dollars 3.6 m
"lethal" assistance - was a vote of hope, but it did not signal an end to the
civil war.  "It should help the peace plan become a reality," he said.

House Democrats rejected Mr Reagan's long-standing argument that the Contras are
a vital bulwark against communist expansion in Central America.  Their view
prevailed that more US aid could undermine prospects for a ceasefire between the
Contras and the Sandinista government.

Democrats have pledged to introduce an alternative package of humanitarian aid
for the Contras, but Mr Fitzwater called the proposal "little more than a
refugee plan."

The Contras put a brave face yesterday on the aid cut-off and vowed to continue
their six-year war against the Sandinista government.

The vote, however, casts doubt on the ability of the Contras to hold together
their 12,000-strong army and may undermine their bargaining power in the
ceasefire talks which they have begun with the Sandinistas in Costa Rica.

Private groups in the US said they would raise money to provide humanitarian aid
for the Contras.  Retired US Army General Mr John Singlaub would not rule out
approaches to foreign governments.

The Iran-Contra fiasco resulted largely because the White House, seeking to
skirt a ban on US military to the rebels, became involved in soliciting funds
from third countries and encouraging the creation of a private aid network.

Further revelations about this shadowy network surfaced in Washington yesterday.
According to published reports, Lt Col Oliver North, the central character in
the Iran-Contra scandal, had asked the Panamanian strongman General Manuel
Antonio Noriega to arrange an East bloc arms shipment to El Salvador which could
then be falsely linked to the Sandinistas.

The New York Times said a dissident Panamanian and former senior adviser to Gen
Noriega, Mr Jose Blandon, had disclosed the secret operation in an interview.
Official US policy currently is to persuade Gen Noriega to step down from power
to encourage democracy in Panama.

The Washington Post reported that in return for secret Contra training, Lt Col
North promised he would try to get the US government to assist Panama with its
debt crisis.

Separately, the Post said that the Reagan Administration would pay a Nicaraguan
defector, Mr Roger Miranda, Dollars 800,000 in rewards, resettlement and a
contract for services.  Mr Miranda and his disclosure of Nicaraguan plans for a
military build-up were a major plank in the administration's battle for Contra
aid.

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                        Financial Times (London,England)

                            February 5, 1988, Friday

Congress Casts Off Reagan's Contra Spell

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Back Page; Pg. 38

LENGTH: 816 words


When it came, after 12 hours of angry debate and weeks of high-powered lobbying,
the vote on the floor of the House of Representatives amounted to the worst
foreign policy defeat of Ronald Reagan's presidency.

By turning down, albeit narrowly, Mr Reagan's request for Dollars 36.2 m (20 m
Pounds (pds)) of new aid to the Nicaraguan Contra rebels, the Democrat majority
in the House broke the spell cast by the Reagan Doctrine: the argument that only
contra support can prevent Central America becoming communist and a red tide
washing ashore at San Diego.

Mr Reagan has used the argument to devastating effect in his dealings with
Congress, snatching a Contra aid victory in 1985, for example, where many had
predicted defeat.  However, the cost has been high.  Unlike his Administration's
foreign policy towards the Soviet Union, which enjoys broad bipartisan support,
the President's Nicaraguan effort has divided the nation.

The 219-211 vote in the House late on Wednesday suggests those divisions remain
as sharp as ever: while 12 of 177 Republicans voted against their President, 47
Democrats voted in effect with Mr Reagan and went on record in support of
further Contra aid.

For all the triumphant talk among the House Democrat leadership headed by Mr Jim
Wright of Texas, the victory carries risks for their party as it prepares for
the November presidential election.

Having proclaimed it is a time to "give peace a chance in central America", they
have gambled on the Sandinista Government's good faith, on its promise to
negotiate a ceasefire with the Contras and to continue democratic reform in
Nicaragua.  If the Sandinistas renege the Democrats are dangerously exposed to
criticism (which will not be banished by their pledge to draw up a purely
humanitarian aid package for the Contras).

For the Contras the House vote begins a period of uncertainty just as they have
begun the first-ever direct talks with the Sandinistas in Costa Rica on a
ceasefire.  Defeat of the package, which included a token Dollars 3.6 m in
military aid, means that they cannot rely on another congressional bail-out.
That does not mean they will soon run out of ammunition (they have plenty); but
it must weaken their bargaining hand with the Sandinistas.

It was the House Speaker, Mr Wright, who more than anyone else bore the
responsibility for the sinking of Mr Reagan and the reshaping of US policy
towards Central American policy now underway.

Last August, Mr Wright was approached by a fellow Texan Congressman, Mr Tom
Loeffler, who had just been recruited as a White House lobbyist for Contra aid,
replacing Mr Elliott Abrams, the abrasive Assistant Secretary of State, who had
been mangled by the Iran-Contra fiasco.

The White House had counted votes in the House and realised there was little
chance of securing a fresh batch of military and humanitarian aid.  Mr Leoffler
raised the idea of a new peace initiative.

Thus was born the Wright-Reagan plan, a bipartisan approach aimed at putting
pressure on the Sandinista government to reform.  What the White House did not
realise was that this joint effort - however tentative - would be enough to give
vital impetus to two days of talks between Central American leaders in Guatemala
City called to discuss a separate peace plan proposed by President Oscar Arias
of Costa Rica.

Mr Wright realised that the Sandinistas would have difficulty rejecting a US
plan and the Arias peace plan.  Indeed, he specifically inserted himself in the
pre-Guatemala City discussions to ensure the Sandinistas came aboard.

From that moment, Mr Wright, helped by Senator Christopher Dodd of Connecticut,
a key member of the Senate Foreign Relations Committee, has conducted an
alternative US foreign policy.  Mr Wright and Senator Dodd - or more recently
their aides - have advised the Sandinistas on negotiating tactics, on the
political landscape in Washington and, to some extent, on what domestic
political concessions to make.

At the weekend, Mr George Shultz, US Secretary of State, described such activity
as "extraordinary" and condemned it outright.  However, supporters of Mr Wright
and Senator Dodd argue that their efforts were vital to keep the peace process
in Central America moving - particularly given the reluctance of the
Administration to play a diplomatic (rather than a military) role.

After Wednesday's vote, the Administration may have to become involved.  The
questions of security arrangements, Soviet aid to Nicaragua and how to enforce
compliance with the Arias plan beg to be answered.

Mr Reagan and Mr Shultz have vowed to fight for the Contra cause until their
last breath, but they must now realise that, for the moment, Congress is pulling
the strings.  The decline of Mr Reagan's power in the last 12 months has been
noticeable in Washington.  Now, on the issue he cares about most, it is doubly
evident.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                            February 5, 1988, Friday

US Presidential Election;
Iowa Launches America's Search For A New Champion

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Pg. 4

LENGTH: 1318 words


Republican Candidates

George Bush: Vice President, aged 63.

Robert Dole: Senate Minority Leader, Kansas Sentator, 64.

Pierre Du Pont IV: former Governor of Delaware, 53.

Jack Kemp: Representative New York 31st District, 52.

Alexander Haig: former US Secretary of State, US Army General and Nato
Commander, 64.

Pat Robertson: former television evangelist, 57.

Democratic Candidates

Bruce Babbitt: former Governor of Arizona, 49.

Michael Dukakis: Governor of Massachusetts, 54.

Gary Hart: former US Senator for Colorado and 1984 presidential candidate, 53.

Richard Gephardt: Representative Missouri 3rd District, 46.

Albert Gore Jr: Senator for Tennessee, 39.

Rev Jesse Jackson: black civil rights leader and 1984 presidential candidate,
46.

Paul Simon: Illinois Senator, 59.

Every December since 1980, the "Bush Brigade" - the core of campaign workers who
helped construct Mr George Bush's narrow victory over Mr Ronald Reagan in the
Iowa caucuses that year - have gathered in Des Moines for a pre-Christmas
celebration.  They have been keeping alive their conviction that their champion
is the man the country needs as its President.

That conviction, and the wisdom of Vice President Bush's relentless pursuit of
the presidency, will be put to the test on Monday when once again Iowa
Republicans tramp out of the six candidates who are running this year for the
Republican Party's presidential nomination.

Iowa Democrats will also be meeting in caucus and registering their preferences
among the seven pretenders to the Democratic crown.

When the results of the meetings are tallied and broadcast throughout the
country, the US will have have been plunged yet again into that exhaustive
process which makes the election of American presidential candidates unique
among modern democracies.

Within four weeks, by March 8, when delegate selection processes for 20 states
will take place, half the delegates to the Republican nominating convention in
August and more than a third of the delegates to the Democractic convention in
July will have been chosen.

The potential exists for one candidate in each party to so dominate the early
trials of strength that he could lock up the nomination by mid-March.

But so uncertain is the outlook, political analysts are not discounting the
possibility that instead of a single candidate scoring a quick knockout, the six
or seven presidential contenders who survive the early rounds will suddenly
discover that they are entered into a marathon, not a sprint.

This might mean that two candidates widely given no chance of occupying the
White House - former televangelist Pat Robertson on the Republican side and the
black Democrat Rev Jesse Jackson - could play a central role in determining who
their party's champion will be.

Four years ago, when President Reagan was riding out the crest of his
popularity, many of his countrymen were ready to believe it when he told them
America was "back" after almost two decades during which it had limped from one
crisis to another.

Such blithe confidence has evaporated.  Two years ago the former Democratic
Governor of Virginia, Charles Robb, was warning his party that because of the
threat inherent in the huge budget and trade deficits that the presidency
between 1988 and 1992 could turn out to be a poisoned chalice.  Since then the
economy has continued to perform well, as far as the American middle class is
concerned, to the point that a fully fledged recession before the election now
looks unlikely.

But, in the interim, the forebodings expressed by Mr Robb have deepened.
Concerns about the economic outlook lead pessimists to warn that the next
President might go down in history bearing the stigma of presiding over economic
disaster.

There are, therefore, members of both parties who suspect that there may be a
silver lining to the dark cloud should their party lose the 1988 election.  On
balance, the Republicans have less to fear on this score than the Democrats.
The latter have won only one of the past five elections and some in the party
fear that another defeat would further create the impression that the
Republicans are becoming the party of the presidency.

Not only that, it would deepen the division within the Democratic Party.  In all
probability another loss would be traced back again to a decline in strength in
the more conservative southern states.

It is not just on the economic front that challenges loom.  The relative decline
in American power among its Western allies, and the specific weakness which a
debtor nation must endure when facing its creditors are forcing Washington to
recognise that it must build more subtle relationships with its allies.

Just how painful an adjustment this is going to be for the world's pre-eminent
superpower is evident from the rhetoric of the 13 candidates on the campaign
trail hitherto.  The politics of resentment, a leitmotiv of the American
political scene since the mid-1960s, has taken on a new dimension.  Both
Democrats and Republicans are identifying foreign allies, their trading
practices, their economic policies or their alleged refusal to share fairly the
burden of the common defence, as important reasons for their country's problems.

At the centre of these political crosscurrents is the presidency itself.  Mr
Reagan may still escape the fate of his four predecessors ahd leave office
neither despised nor ridiculed by a majority of American voters.  But he has
failed finally to achieve the goal which was within his reach in 1984 of
restoring American's confidence in the office of the presidency.

The budget stalemate, Mr Reagan's inability to develop a more pragmatic
relationship with Congress after the Republican loss of the Senate in 1986, and
the exposure of his Administrations' disdain for Congressional prerogatives as a
result of the Iran-Contra scandal, have resulted not only in the evaporation of
his domestic political influence but also in a revival of the debate over how to
make the presidency an effective point of consistent political leadership.

To be fair, there is not the intensity in this debate that existed at the time
of Vietnam and Watergate.  It is more a sense that Mr Reagan's leadership and
management style, his resort to consistent Congress-bashing and the rhetorical
appeals to the people through the medium of television are an inadequate style
of presidential leadership.  Polls are showing that voters have identified the
concept of "competence" as a quality they are looking for in their next
President, a finding which amounts to a rejection of Mr Reagan's perceived style
of management.

Interestingly, most of the candidates are appealing to voters not with the line
that they are outsiders who can sort out the "mess" in Washington, but rather
that they are either Washington insiders or experienced governors of states who
have learnt how to deal with the legislative branch of Government and would find
ways to ensure that the President and the Congress work together.  Senator
Robert Dole and Governor Michael Dukakis of Massachusetts are making this sort
of pitch.

The next president may indeed need to adopt a more pragmatic style of leadership
in a nation where many are sensitive to the fact that all is not going well for
their country and are suspicious of the diet of political hyperbole which it has
been fed by Mr Reagan.

The fact remains, however, that competence alone is a faded flag around which to
ask an American electorate to rally, for whatever they tell opinion pollsters,
Americans are hoping too for inspiration from their President.

So far none of the candidates has found a way to offer a vision of where the
country should be going in words which inspire confidence that he knows how to
get there.  But the weeding out of the candidates, which could begin in Iowa,
should begin to sharpen the national debate.

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                            February 5, 1988, Friday

US Presidential Election;
Opinion Polls Rule Campaigns

BYLINE: Lionel Barber

SECTION: SECTION I; Pg. 4

LENGTH: 470 words


On the campaign bus in Iowa, the one topic guaranteed to set reporters reaching
for their portable computers is the state of the polls.

Opinion polls make news.  At their crudest, they reveal who is hot and who has
gone cold in a crowded field; at their best, they may illuminate the issues
preoccupying the electorate.

In this year's presidential campaign, the polls have had more than their share
of coverage.  Scarcely a week passes without a reference to Mr George Bush and
whether the public believes he is lying about his role in the Iran-Contra
scandal; or whether Gary Hart has more/fewer/the same number of "new ideas" as
other Democrat candidates.

The question troubling some political scientists is whether the polls are
distorting the process.  Mr James Thurber, director of Presidential and
Congressional Studies at the American University, says: "Polls are capable of
measuring concepts and attitudes, but they may also cloud issues."

In a small state like Iowa, where less than 15 per cent of voters will turn out,
there are good reasons to be cautious, particularly given the nature of the
Democrat caucuses.

For all the preferences voiced about candidates in earlier polls, Democrat
voters on Monday night will engage in open debate and are vulnerable to changing
their minds.

This fluidity is compounded by the fact that a Democrat candidate must receive
at least 15 per cent of the vote within the caucus to qualify for a percentage
of the state-wide vote - otherwise his supporters can cross to another
candidate.

These caveats have not stopped news organisations and candidates investing
several million dollars in polls.  According to Ms J Anne Selzer, of the Des
Moines Register, the most important newspaper in Iowa, "Polls have been a
valuable news tool and a way of examining the mood of the people and the
dynamics of the campaign."

The campaigns themselves are using ever more honed polling techniques.  The
sharpest is probably the "tracking poll" which taps voters' sentiments over a
period of days.  "We look at what issues are moving them, what they think of our
candidate and how they view another candidate's strength and weaknesses," says
one official in Iowa.

The result is "poll wars." One candidate picks up an issue which he knows voters
feel strongly about and pumps it into debate; another candidate, registering his
vulnerability on that same issue on his tracking poll, hits back.

Mr Thurber says that the modern presidential campaign is now dominated by three
figures other than the candidate: the campaign manager, the media specialist,
and the polling specialist.  Such a concentration of power undermines the
prospect of more thoughtful policies emanating from a wider group such as the
party and that, he warns, may in the end hurt good government.

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                        Financial Times (London,England)

                            February 5, 1988, Friday

US Presidential Election;
High-Tech Innovations Take Campaigns Into Another Dimension

BYLINE: Stewart Fleming

SECTION: SECTION I; Pg. 4

LENGTH: 767 words


Last July 85 Iowa voters were asked to watch on television one of the many
debates between presidential candidates.  This one was taking place hundreds of
miles away in Houston, Texas, writes Stewart Fleming.

Each set was fitted with a device with which to register positive and negative
reactions as each candidate spoke.  Their judgments were correlated instantly by
computer and projected on a screen in the form of pulsating graphs superimposed
on the candidate as he talked.

Mr Bill Batoff, a Philadelphia businessman, Democratic political activist and
the originator of EAR (Electronic Audio Response), says quite openly that this
technological marvel is not simply measuring the reaction of voters to the
substance of what the candidate is saying.  Its uses go much further.

"It is a combination of emotional and intellectual response.  I can learn where
the strength of the viewers' reaction has diminished, for example whether it was
the question he was asked, his volubility, the voice inflection ...  I saw where
Bruce (Babbitt) got hurt by his body language ...  the real world is media and
this is part of what the candidates are about," he adds.

The sophistication of modern communications technology, and the use the
candidates are making of it, has passed beyond the understanding of the average
voter.

One candidate Senator Joe Biden, has already been driven out of the race by the
impact of the visual high-tech innovations.  A so-called "attack" video
recording distributed by the rival campaign of Governor Michael Dukakis showed
the Delaware Senator plagiarising, Mr Neil Kinnock, the British Labour Party
leader.

Increasingly, too, the candidates are using television to by-pass the filtering
process of normal print or television journalism.  Mr Pat Roberton, the former
televangelist who complains bitterly that the press misrepresents him, has
bought five half-hour television advertising slots in Iowa in order to put his
ideas across to voters unfiltered.

His method is an interview with a chosen journalist, thus creating the
impression that what the viewer is seeing is not an advertisement even though at
the beginning it has to be identified as such.

Satellite television communications are proving perhaps the most revolutionary
innovation.  When Senator Al Gore of Tennessee announced his candidacy last
summer his campaign notified local television stations across the country of the
time of the announcement and the broadcasting co-ordinates so local stations
could tune in.

The candidate is thus freed of dependence on the national television networks
for coverage, and, at much less cost, can also target his mesage at particular
areas.  If the local station takes it live, he also escapes the journalistic
filtering process.  Political consultants know that the credibility associated
with a television newscast is worth volumes of paid advertising.

Only last week Americans witnessed one of the most sophisticated efforts by a
campaign to exploit the power of television.  Mr George Bush deliberately
exposed himself to what his advisers knew would be a tough interview by the CBS
News anchorman, Mr Dan Rather, in order to demonstrate that he had the capacity
to be combative and foreful, attributes he is generally thought to lack.

Choosing Mr Rather was no accident either, for he is a man Republican voters
love to loath.  Facing the anchorman down in a heated confrontation that was
picked up by all the other networks, becoming news in itself, was, in the
opinion of the Vice President's supporters a "defining moment."

This might suggest that manipulation of the media is undermining democracy.  It
is, of course not new; the Nixon campaign of 1968 is widely seen as having first
refined the technique at a truly national level.  But, reassuringly, a New York
Times poll this week questioned whether the impact of such an obviously staged
event had been as positive as many had initially assumed.

Predictably the poll showed Republicans tended to side with Mr Bush in the
confrontation.  It did not indicate, however, whether this might have helped Mr
Bush in his struggle with Senator Robert Dole for the nomination.

Moreover, if Mr Bush had hoped to put to rest questions about his role in the
Iran/Contra scandal through the interview, the poll suggested he may have
failed.

The New York Times report said that since last July there had been a striking
shift even in Republican opinion against him on that score.  Some 46 per cent
thought he was lying about important elements of the scandal, compared with 23
per cent in July.

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                        Financial Times (London,England)

                            February 5, 1988, Friday

Mr Reagan's Lost Cause

SECTION: SECTION I; Editorial; Pg. 16

LENGTH: 622 words


Twice in the last 10 years, the US Congress has narrowly but decisively
despatched an important message about American relationships with its southern
neighbours.  In 1978 it ratified the treaty transferring control of the Panama
Canal from US hands by the end of this century; on Wednesday night it denied the
Administration more funds for the Nicaraguan Contras.  On both issues Ronald
Reagan was on the losing side.

His Administration has always had its obsessive qualities.  In foreign policy,
its leit-motif has been a fixation with the communist threat around the world.
This has not prevented the US from signing one arms control agreement with the
Soviet Union and seeking to negotiate another, but, especially where its
southern back door is concerned, fear of communist intrusion has been dominant.

It is natural that the US should have a close interest in Central America and
the Caribbean.  The Monroe Doctrine laid down the principle 165 years ago and
there has been a consistent record of US intervention in the region ever since.
President Kennedy became consumed with Castro's Cuba as a Soviet beachhead.  The
same perceived threat induced President Johnson to send troops to the Dominican
Republic and Mr Reagan to invade Grenada.

But no US Administration has allowed its priorities to become so skewed as Mr
Reagan's in its policies towards the Sandinistas.  At the cost of no real Contra
successes on the ground, the President has had to put his prestige on the line
with monotonous regularity in trying to extract funds from Congress.  More than
that, his obsession brought about the Iran-Contra scandal, which undermined the
credibility of his second term.

Mr Reagan can console himself that at least the Sandinistras are talking to the
Contras, something that might not have happened without US support of the
insurgents.  But the Contras constitute nobody's ideal, other than Mr Reagan's,
of a legitimate democratic force, and, stripped of that support, it is hard to
be optimistic that the talks will get far.  Continuing pressure on the
Sandinistas to be reasonable, however, will result from Nicaragua's dire
economic plight and the unwillingness of the Soviet Union to continue pouring
money down a drain.

But the key to the President's political failure at home has been his inability
to convince his public and politicians that a hostile regime in a country as
small as Nicaragua constitutes a threat to US domestic security.  In this latest
instance, the existence of an alternative peace plan, devised by President Arias
of Costa Rica and aimed at the whole region, may have been a contributory factor
with Congress.  But the undeniable conclusion is that Mr Reagan's case was never
good enough.

The optimal solution would be for the US honourably to cut its losses by
supporting the Arias plan as the best available, if imperfect, vehicle.  For
President Reagan this may be too much to expect, given his emotional commitment
to his "freedom fighters." But the next US President, less constrained, might
consider economic assistance, conditional on good Nicaraguan behaviour.

There are wider lessons, too.  The Administration has been showing welcome, if
belated, signs of attending to problems in southern Africa and the Middle East.
It is hard to know what to make of the latest talks on Angola, other than to
note that they did involve direct contacts between the US and Cuba; similarly
the shape of a new US initiative for Israel's occupied territories remains
indistinct, but the despatch of the State Department emissary to the region
holds promise.  More of this, and less on Central America, would restore a
necessary balance of US foreign policy, even in an election year.

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                        Financial Times (London,England)

                            February 8, 1988, Monday

Noriega Disappoints Latin America

BYLINE: David Gardner, Mexico City

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 458 words


Latin American leaders have stayed conspicuously on the sidelines during the
last three months, as the US has stepped up its campaign to oust Panama's
military strongman, Gen Manuel Antonio Noriega, who was indicted on Friday by
two federal grand juries in Florida on drug-trafficking charges.

When business-led strikes and riots against the military-dominated regime in
Panama began last June, hardly anyone in Latin America dismissed out of hand Gen
Noriega's claim that Washington was conspiring with Panamanian dissidents to
regain control over the Panama Canal.

The late Gen Omar Torrijos, Panama's magnetic leader from 1968 until his death
in 1981, won sovereignty over the strategic waterway by turning a national
campaign into an aspiration espoused by all Latin America.

This was satisfied in 1977 by the Torrijos-Carter treaties, which set up a
US-Panamanian administration for the canal from 1979, returned the Canal Zone to
Panamanian sovereignty, and provided for full Panamanian control and defence of
the canal from 1999.

Many Latin American leaders, who initially responded to Gen Noriega's attempt to
frame his dispute with the US in regional terms, appear now to have seen through
his threadbare regional flag.

Latin American officials now appear clearly to distinguish between Panama's
institutional participation in initiatives such as the Contadora Group and Gen
Noriega's alleged delinquency.

His summary dismissal of three army commanders and four presidents since 1981
has caused a certain embarrassment, in a region trying to shake off an image of
instability, but those moves are likely to have been decided more by the now
incontrovertible evidence that most Panamanians want, the general out than the
US-inspired leaks that detailed his alleged corruption and chicanery.

Now that Mr Jose Blandon, a former senior political and intelligence adviser to
Gen Noriega and Gen Torrijos since 1971, has matched and amplified many of the
allegations, however, the regional chorus of disquiet is likely to swell.

Mr Blandon makes two particularly devastating claims: that Lt-Col Oliver North,
a former White House aide involved in the Iran-Contra arms affair, persuaded Gen
Noriega to let 250 Contras train in Panama in 1985-86 (while US aid to the
Nicaraguan rebels was suspended); and that the general agreed to send arms to El
Salvador's left-wing insurgency, disguised as a shipment from Nicaragua, which
the White House intended to put before Congress so as to justify more aid to the
Contras.

In the Contadora Group, Panama has been the seat of regional peace initiatives.
If it become clear that Gen Noriega was undermining these for personal profit,
his isolation within Latin America will be complete.

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                        Financial Times (London,England)

                            February 8, 1988, Monday

Bush Facing Defeat In Iowa Poll

BYLINE: Stewart Fleming, Iowa

SECTION: SECTION I; Back Page; Pg. 36

LENGTH: 618 words


Vice President George Bush yesterday came close to conceding defeat in the 1988
Iowa caucuses, the first big hurdle of the 1988 presidential race.

Hours after the publication of a final poll on the eve of tonight's Republican
caucuses here, Mr Bush admitted that he was "quite a bit behind" his main rival,
Senator Robert Dole of Kansas.

Mr Bush, in a television interview, looked flustered in the face of renewed
questioning about his role in the Iran/Contra scandal, his recent calculated use
of bad language, and the attack by his campaign staff last week on Senator Dole
and his wife Elizabeth.

Mr Bush apologised for any offence that might have been given to Mrs Dole and
conceded that he had not authorised the attack on the senator, saying he could
not check everything done by his staff.

In the course of the interview, ABC newsman Sam Donaldson challenged the Vice
President about his temperament, saying that some people thought it "raises
suspicions that maybe you are not up to the job."

"They cite the fact ...  after the debate with (Dan) Rather (of CBS) when you
said - 'well the bastard never laid a glove on me' and when you said he makes
(CBS reporter) 'Lesley Stahl look like a pussy'."

Clearly embarrassed, Mr Bush replied: "I think it goes back to my Navy days -
like you, Sam, every once in a while I get fired up about some things ..."

The Vice President, although the front-runner in national polls as well as in
polls in New Hampshire, where a pivotal presidential primary election is
scheduled for February 16, was behind Senator Dole in a Des Moines Register
survey published yesterday.  The Senator had a 37 per cent to 23 per cent lead
over his rival.

Ever since Mr Jimmy Carter, a former governor of Georgia who was unknown
nationally, used Iowa's Democratic caucuses in 1976 as a launching pad for his
successful bid for the presidency, candidates for the White House, both
Republican and Democrat, have used Iowa as the vital first test in the election
campaign.

A defeat here for Mr Bush would not be a crippling blow, because he has trailed
Senator Dole in Iowa polls for months.  But it would substantially increase the
pressure on him to win in New Hampshire.

Mr Bush, who looked tired yesterday, may also be worried by the strong showing
in the Iowa poll of Mr Pat Robertson, the former television preacher.  Mr
Robertson is the first choice of 13 per cent of likely caucus-goers, and rival
candidates fear that the well-organised and committed core of evangelical
Christian supporters will turn out in force tonight.

In the Democratic race, which the leading candidates agree is tight, Congressman
Richard Gephardt of Missouri is maintaining a slender lead.

Mr Gephardt's campaign took off here three weeks ago when he launched a powerful
television advertising attack on the threat to American jobs from unfair trade
practices by its trading partners, particularly South Korea.

In a poll of likely Democratic caucus-goers, Mr Gephardt is the first choice of
25 per cent of respondents, ahead of Senator Paul Simon of Illinois (19 per
cent).

With 24 hours to go before about 200,000 Iowans attend caucuses, or political
debates, at which they will express presidential preferences, 11 Republican and
Democratic candidates are mobilising hundreds of volunteers and bombarding
television viewers with 30-second advertisements appealing for support.

Governor Michael Dukakis told a cheering rally in the industrial town of
Waterloo on Saturday night, that with so few voters scattered around more than
2,400 locations, three or four extra voters braving the bitter weather could
spell the difference between a strong showing and a landslide victory.

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                        Financial Times (London,England)

                           February 9, 1988, Tuesday

Senate To Probe US-Panama Drug Trade Links

BYLINE: Nancy Dunne, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 385 words


A senate foreign relations subcommittee yesterday opened hearings on Panama
which are expected to detail the close ties between US government agencies and
international drug cartels.

Senator John Kerry, chairman of the subcommittee on terrorism, narcotics and
international communications, said the hearings, which follow a bi-partisan
two-year investigation, will tell a "shocking and disturbing story."

Evidence presented to the hearings will extend beyond the role of Panama's
leader, General Manuel Antonio Noriega, to the ties between the US-supported
Contra rebels and the drug traffic, he said.

It will show how the US put foreign policy considerations above concern about
the drug trade, when it was "destabilising whole countries."

The hearings got underway one day after Panama recalled its US ambassador for
"urgent consultations" and Gen Noriega ordered an investigation into the
Panamanians and Americans who have testified against him.

Two US Federal Grand Juries last week indicted the general on drug trafficking
and racketeering charges.

Meanwhile, Gen Noriega added his own accusations in an US television interview
on Sunday when he said Mr John Poindexter, the US national security adviser who
resigned as a result of the Iran-Contra scandal, had sought Panama's
co-operation for an invasion of Nicaragua and had asked to use Panama as a
training ground for Contra rebels.

Mr Jose Blandon, Panama's former consul in New York who will testify before the
Senate subcommittee today, has linked Col Oliver North, the former Reagan
National Security Council aide, with plans to get Panama to help "frame"
Nicaragua for delivering arms to the El Salvadorian rebels.

The Reagan Administration is handicapped in its dealings with Panama by an
agreement Gen Noriega reached with the Central Intelligence Agency.

According to a report in the Washington Times, the CIA allowed the general to
appoint his own military liaison staff with the agency in exchange for consent
to use Panama as a regional spy post.

The first witness in the subcommittee hearings, Mr Robert Morgenthau, District
Attorney of New York, detailed the growth of drug use in the US and ridiculed
the State Department for certifying that many of the Latin American countries
were working to limit the drug trade.

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                        Financial Times (London,England)

                          February 18, 1988, Thursday

US Support Bolsters Kuwait's Fragile Confidence

BYLINE: Andrew Gowers

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 955 words

HIGHLIGHT:
An uneasy calm has fallen on the vulnerable state at the eye of the Gulf
conflict, says Andrew Gowers


A curious, wary calm has descended on Kuwait, that sensitive barometer of
political sentiment at the eye of the Gulf storm.

Last autumn, the tiny, vulnerable emirate was suffering a severe bout of the
jitters in the face of repeated Iranian missile attacks and Iranian-inspired
acts of sabotage.  This has now given way to what could almost be described as a
mood of complacency.  For the first time in two years or more, the Gulf war -
though still frozen in a gruesome stalemate less than 100 miles away - seems
somehow remote.

In the first place, there has been a respite in missile attacks.  The last
Silkworm missile to be fired at Kuwait landed in the sea in early December after
being deflected from its target - the newly-re-opened Sea Island oil terminal -
by an American-built reflector barge.

In addition, a long-threatened land offensive by Iran against Iraq has failed to
materialise.  Although this is the traditional time of year for such operations,
and despite a flood of the usual bellicose rhetoric from Tehran, action on the
all-important southern front has been virtually non-existent in the past few
weeks.

Fierce fighting has instead been largely confined to northern Iraq, where Iran
backs a Kurdish rebellion.  The contrast with this time last year, when the
Iranians alarmed Arab backers of Iraq by coming close to a breakthrough at
Basra, Iraq's second city, could hardly be greater.

This pause may, of course, be purely tactical.  Iran is well aware that the five
permanent members of the United Nations Security Council are currently working
on an arms embargo against it to enforce their Gulf war ceasefire resolution,
and will not want to do anything which might focus their minds more clearly.

Iran has also been making more conciliatory noises towards the Arab side of the
Gulf, and has been prodded by its ally Syria into promising a "dialogue" with
the United Arab Emirates on behalf of all six Gulf Co-operation Council states,
since the December GCC summit in Riyadh.  A new outbreak of fighting in the
south would scarcely vouch for Iranian good intentions.

Kuwait sees these contacts as a useful short-term shield against renewed Iranian
harassment - though officials make no effort to disguise their scepticism that
the mediation will yield any concrete results.  "We see the Syrians go back and
forth, but we have no information as to how much they have achieved," said Mr
Saud al-Osaimy, Minister of State for Foreign Affairs.

Yet Western diplomats believe their are other solid reasons for Iran's
reticence.  They report signs that the Iranians have had grave difficulties in
mobilising sufficient forces for a major onslaught.  The Tehran leadership has,
for instance, extended the duration and applicability of conscription in recent
weeks, calling up university students and civil servants.

Nor will it have escaped Tehran's notice that Iraq has substantially improved
its defences in the past year.  As a result, diplomats in Kuwait predict that if
there is an offensive, it is more likely to take the form of repeated, limited
probes rather than an all-out push.  Some observers are even beginning to
speculate that a de-escalation of the land war is at hand.

There has also been something of a lull within Kuwait.  Last year saw a series
of sabotage attempts in the emirate, several of which were carried out
apparently at Iran's behest by local Shia Moslems.  Yet the last of these were a
pair of relatively modest bombings in the autumn.

But perhaps the most important factor in Kuwait's fragile new-found confidence
is the psychological and material support it has had from foreign friends in the
past nine months - from Egypt and Britain, for example, but especially from the
US.  The so-called "re-flagging" exercise, under which 11 Kuwaiti oil tankers
have been registered in the US and are now regularly escorted by American
warships through the Gulf, has become a significant success for Kuwait and the
US.  What is more, the Kuwaitis - who were almost certainly disturbed at the
outset by the size of the US military build-up in the region and by the Iranian
reaction to it - are no longer shy of voicing their approval.

American convoys - which started so inauspiciously, when the reflagged tanker
Bridgeton hit a mine last July - have now become a routine matter.  Although
another US-flagged tanker, the Sea Isle City, was damaged by a Silkworm missile
in Kuwaiti territorial waters last October, and Iran continues to attack neutral
and unescorted ships in the southern Gulf, there has not been a single raid on a
Kuwaiti tanker since re-registration began.

Quietly, through its mine-clearing and helicopter surveillance activities, the
US Navy has succeeded in neutralising the waters of the northern Gulf - to the
point where Washington has this week felt able to make a significant reduction
in its naval fleet by withdrawing the battleship USS Iowa and two escorts.

Despite this move, early Kuwaiti doubts about the durability of the US
commitment also appear to have diminished.  The Kuwaiti ambassador to Washington
told an American newspaper two weeks ago that he thought current US policy in
the Gulf had repaired the damage done to American standing in the Arab world by
the Iran-Contra affair, and would continue whoever wins the presidential
election in November.

That is a bold prophecy.  American or Egyptian readiness to defend Kuwait
remains untested.  Indeed, diplomats say that Kuwait's hopes of a broader US
security guarantee were dealt a severe blow when Washington failed to respond to
last October's missile attack on the Sea Island terminal.  As realistic Kuwaiti
officials concede, it is too early for them to relax.

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                        Financial Times (London,England)

                          February 20, 1988, Saturday

Second Top Israeli Spy Suspected In US

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 361 words


US Justice Department officials have concluded that Israel almost certainly had
a second top American working for it as a spy apart from Mr Jonathan Pollard,
who was sentenced last year to life imprisonment for espionage.

The Washington Post yesterday, quoting what it described as informed sources,
said government investigators who were continuing their inquiries into the
Pollard case had reached this conclusion on the basis of information they had
obtained from the extensive debriefing of Mr Pollard.

The second American has been dubbed Mr X, the newspaper said.

The allegation comes on the eve of a visit to Israel next week by Mr George
Shultz, the Secretary of State, as part of a renewed effort by the US to revive
the stalled Middle East peace process since the outbreak of violence in the
occupied Gaza Strip.

Israeli officials deny the country has spies in the US government and maintain
that Israel does not conduct espionage against the US or its interests.  It
describes the Pollard case as an aberration.

The report in the Washington Post yesterday said Mr Pollard told US
investigators that his Israeli handlers often specified by date and document
control number the highly-sensitive US document they wanted him to acquire.  The
newspaper said it was learned that Mr Pollard did not himself have direct access
to this information.

US investigators have concluded that Mr X was either highly placed or in such a
position that he himself could not regularly gather the documents.

The report quoted one investigator saying that there must have been a link
between the arrest of Mr Pollard and US arms sales to Iran.

Within weeks of Mr Pollard's arrest, Lt Col Oliver North of the US National
Security Council staff received Israeli permission to use, for "whatever purpose
he wanted," Dollars 800,000 left over from an aborted Israeli sale of US
military spare parts to Iran according to Col North's testimony following
exposure of the Iran/Contra scandal.

Public sympathy for Israel, even among many American Jews, is already being
tested by the violent Israeli response to the riots by Palestinians in the
occupied territories.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                           February 22, 1988, Monday
                              Correction Appended

Noriega Hearings Expose Scabs On Washington's Arm

BYLINE: Lionel Barber

SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 1001 words

HIGHLIGHT:
Lionel Barber on Panama's leader, drugs and old friendships


Mr Ramon Milan Rodriguez must rank as one of the more outlandish witnesses to
appear before a US congressional committee.

An accountant by training, Mr Rodriguez's skill is to disguise the source and
destination of illegal narcotics profits, better known as money laundering.

At his peak, he was earning around Dollars 2 m a month and laundering about a
Dollars 2 bn dollars a year, mostly through Panamanian banks.

Now, aged 36, Mr Rodriguez has earned 43 years in a US gaol.

As Mr Rodriguez explained to the Senate Foreign Relations sub-committee on
Terrorism, Narcotics and International Communications last week, his chief drug
trafficking ally was Gen Antonio Manuel Noriega, commander of the Panamanian
armed forces and de facto leader of the country.  Gen Noriega received between
Dollars 320 m and Dollars 350 m for services rendered.

The testimony, in large part corroborated by two other witnesses, one hooded,
the other a former senior Panamanian adviser to Gen Noriega, was sensational.

A week earlier, two federal grand juries in Florida had indicted the general on
drug trafficking charges, an extraordinary action against a leader of a foreign
country.

Coming on top of months of criticism by the US State Department of General
Noriega's corrupt and undemocratic government, the message seemed clear: the
Administration of President Ronald Reagan was turning all the screws to oust the
Panamanian dictator.

In fact, the congressional hearings and the federal indictments have complicated
Washington's efforts to resolve the Panamanian conundrum.  Talk of a deal
whereby the Reagan Administration would drop the indictments in return for Gen
Noriega stepping down remains, for the moment, just that.

Panama is important to the US because of its canal through which 60 per cent of
US exports and US-bound trade passes, according to Pentagon figures.  Some
10,000 US troops maintain and defend the canal which is governed by a 1979
treaty.  The pact, pushed by the administration of President Jimmy Carter and
ratified by the US Senate, stipulates that the US will hand over these
responsibilities to the Panamanians on December 31 1999.

The purpose of the 1979 treaty was to defuse nationalist protests against US
control of the canal and to ensure stability in Panama.  Now the opposite seems
to be happening: As one US official says: "If we don't challenge Noriega now, in
the year 2000, we risk handing over a vital waterway to a gang of thugs."

Such comments tend to ignore the fact that Gen Noriega - like the one-time
dictator of Nicaragua, Anastasio Somoza - was until recently a card-carrying US
ally with close links to the Central Intelligence Agency.  To paraphrase
Franklin Roosevelt's well-honed phrase, Gen Noriega may be an SOB, but he was
Washington's SOB.

Furthermore, Gen Noriega's ties to drug trafficking go back at least 15 years in
US files.  In 1972 an official in the administration of President Richard Nixon
involved in fighting the narcotics trade set out five options for dealing with
the general.  One was assassination.

More recently, Gen Noriega enjoyed close ties with Mr William Casey, the late
CIA director, and reportedly was in frequent touch with Marine Lt Col Oliver
North, the disgraced former White House aide at the centre of the Iran-Contra
scandal.  It was Gen Noriega who offered to let the Nicaraguan Contra rebels
train in Panama during a congressional ban on US military aid.

The Panamanian strongman's appeal grew in step with the threat posed by Marxist
insurgent movements in Central America, supported by the Leftist government in
Nicaragua.  When, last summer, the Panamanian people took to the streets,
spurred by claims by a senior army officer that the 1984 elections were rigged,
the Administration decided the general had at last outlived his usefulness.

However, Gen Noriega retains ties with a former chief of staff to Vice-President
George Bush - a fact remarked upon by Mr Bush's Republican presidential
challenger, Senator Robert Dole of Kansas.

Also, the general - a former expert in military intelligence - almost certainly
possesses a good deal of documented evidence of his links with the Reagan
Adminstration.  He may even have relevant paperwork than the White House, much
of which disappeared during Col North's shredding party before the Iran-Contra
scandal broke in November 1986.

The Senate sub-committee hearings on the Panamanian drug connection 10 days ago
were in fact a mere prelude to the main act next month: an attempt by the
chairman of the panel, Democrat Senator John Kerry of Massachusetts, to prove
his two-year-old claim that the Nicaraguan Contra rebels engaged in drug
trafficking to keep their finances going during the congressional aid cut-off in
1984-86.

The main reason for recycling well-known claims about Gen Noriega's involvement
in the drug trade was to win the support of a ranking Republican member of the
Senate Foreign Relations committee, Senator Jesse Helms of North Carolina, the
most outspoken critic of the 1979 Panama Canal Treaty.  Senator Helms has
achieved his wish to pillory the general and by implication the treaty, and
Senator Kerry can claim he has a big-partisan inquiry.

The result of these machinations was last week's vivid portrayal of the
billion-dollar drug trade and an exposure of Washington's double-edged attitude
to a despot who, when times were good, was commended by the US Drug Enforcement
Agency for a "vigorous anti-drug trafficking policy."

Many more tales of duplicity and hypocrisy are likely to emerge in next month's
congressional hearings.  Whether they will help the Administration find a way
out of its impasse with Panama is more doubtful.

In the Financial Times of February 22 it was erroneously stated in an article on
Panama that 60 per cent of US exports and US-bound trade passed through the
Canal.  This should have read that 60 per cent of Panama Canal traffic consists
of goods being carried to and from the US.

LANGUAGE: ENGLISH

CORRECTION-DATE: February 23, 1988, Tuesday

CORRECTION:
In the Financial Times of February 22 it was erroneously stated in an article on
Panama that 60 per cent of US exports and US-bound trade passed through the
Canal.  This should have read that 60 per cent of Panama Canal traffic consists
of goods being carried to and from the US.

GRAPHIC: Picture Noriega, Washington's SOB

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                        Financial Times (London,England)

                             March 4, 1988, Friday

Mr Abrams' Big Moment

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 536 words

HIGHLIGHT:
Lionel Barber on Washington's behind-the-scenes operator on Panama


Mr Elliott Abrams, the US State Department official in charge of Latin American
affairs, has proved that, in Washington at least, there is life after death.

Mr Abrams, Washington's point-man on Panama, has over the past week been the
behind-the-scenes operator orchestrating opposition moves and pressing the
Reagan Administration to step up economic pressure for the ousting of Panama's
military strongman, General Manuel Noriega.

Last summer it was a very different story.  As the Congressional hearings into
the Iran-Contra affair peaked, Mr Abrams' fortunes reached a nadir.  His claims
that he knew nothing of the secret White House operation to arm the Nicaraguan
Contra rebels were sharply critised in Democratic and Republican circles; after
his testimony, there were calls for his resignation.

Thanks to the support of Mr George Shultz, the Secretary of State, Mr Abrams
survived.  Gradually, he has sought to rehabilitate himself, shifting his focus
to other parts of Latin America and focusing on the drive for democracy in the
region, including right-wing dictatorships such as Chile and Paraguay.  Panama
is his big moment.

But Panama also presents big risks.  While some believe Mr Abrams has in mind a
Philippines-style transition to democracy, others argue that the two countries
have little in common.  The Philippine opposition to Ferdinand Marcos was far
better organised than the present efforts in Panama City; furthermore, the
Panamanian armed forces do not appear to suffer from the kind of splits which in
the Philippines military eventually helped Mrs Corazon Aquino to power.

One US official, commenting on Mr Abrams' support for the freezing of Panamanian
assets in the US, said: "We have to be very careful not to move too fast.  If
the Panamanian people think Uncle Sam is stomping all over them, support for
General Noriega could grow."

Mr Abrams - a New York-born lawyer who has never betrayed a lack of confidence
in his own ability - would argue that his current preoccupation with Panama is
perfectly consistent.  In June last year, as the first Panamanian street
protests against Gen Noriega erupted, he identified "the foremost public issue
today" as democracy.

Mr Abrams' success is that he has convinced other sections of the US government
- including the Pentagon - that the general must go.  Late last year, it looked
as if he and other administration officials were close to a deal.  Then, for
reasons which remain unclear, the strongman backed away.

Last month, Mr Abrams met with the then civilian figurehead president, Mr Eric
Arturo Delvalle, in Florida.  It seems he encouraged Mr Delvalle's plan to oust
Gen Noriega even though he must have known it was doomed.  Both men may have
calculated that the spectacle of Gen Noriega removing yet another civilian
president would provide a rallying point for the opposition.

The problem is that Mr Delvalle makes an unlikely opposition hero - he was
installed by Gen Noriega - and the strategy still does not address the supremacy
of the Panamanian military.  If Mr Abrams and the Administration are to counter
charges that Washington is merely reacting to events, they will soon need to
provide an answer.

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                        Financial Times (London,England)

                            March 10, 1988, Thursday

US Presidential Election, Super Tuesday;
Bush Shows His Rivals A Clean Pair Of Heels

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Pg. 6

LENGTH: 512 words


Vice President George Bush's sweeping victory in the Super Tuesday regional
primaries has made him the near invincible candidate for the Republican party's
nomination for President.

With more than half the 1,139 delegates needed for the nomination under his
control, Mr Bush has a huge lead over his chief rival, Senator Robert Dole of
Kansas.  A Bush win next week in the Midwest industrial state of Illinois could
deliver the knock-out blow.

The Vice-President has also steamrollered his two other Republican challengers:
Congressman Jack Kemp of New York and the Rev Pat Robertson, the former
television evangelist.

Mr Kemp, who started as the conservative intellectuals' candidate and ended as a
football-throwing cheerleader for the Reagan tax-cutting revolution, appears to
be ready to withdraw from the race.  Mr Robertson has vowed to fight on, but his
failure to win any states in the Southern Bible Belt, his home territory, make
him a fringe candidate.

If Senator Dole is to halt Mr Bush, he must create a fire-break in Illinois
where his own polls last week showed him eight points behind the Vice-President.
A defeat there would dramatically increase the pressure for the party to unite
behind a winner; moreover Mr Dole's lack of organisation (he is not even on the
slate in many Congressional districts in the delegate-rich state of New York)
now looks a fatal flaw in his campaign.

Only four weeks ago, when Mr Bush suffered a humiliating third place finish in
the Iowa caucuses, the race looked very different.  Hounded by questions
surrounding his ambiguous role in the Iran-Contral scandal and his effectiveness
as Vice-President, Mr Bush came across as hesitant, testy and eminently
beatable.

The turning point came in the New Hampshire primary.  The Dole campaign played
safe and pinned its hopes on an apparent surge of support in the polls.  The
Bush camp, helped by a superb field organisation led by Governor John Sununu and
a burst of negative television advertising, plugged the leaks and led the
Vice-President to a convincing victory.

Mr Bush's landslide win on Super Tuesday replicated the New Hampshire strategy:
broad television advertising stressing his claim to the Reagan legacy, coupled
with a regional party organisation which none of his rivals could match.

The Vice-President has literally spent seven years cementing loyalties in the
Republican party hierarchy, exploiting his office to offer promises of future
partronage.

Mr Kevin Phillips, a Republican political analyst, said that only some
unforeseen scandal - Panama, Iran-Contra or from his days as CIA director - can
deprive Mr Bush of the nomination.

Yet, so far the Republican race has been marked by a personal antagonism, even
class warfare, between the genteel East-Coaster Mr Bush and the gritty Midwest
fighter Senator Dole, with Mr Robertson a spoiler on the sidelines.  The
potential for conflict - despite Mr Bush's crushing victory in the South - looms
large in the Republican race all the way to the party convention in New Orleans
in August.

LANGUAGE: ENGLISH

GRAPHIC: Drawing, no caption

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                        Financial Times (London,England)

                            March 12, 1988, Saturday

McFarlane Says He Withheld Iran Arms Information

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 421 words


President Reagan's former national security advisor, Mr Robert McFarlane,
yesterday admitted four charges of withholding information from Congress on
secret US efforts to arm the Nicaraguan Contra rebels.  He agreed to co-operate
with a criminal investigation into the affair.

Mr McFarlane's plea-bargain is expected to strengthen the case for criminal
charges against former Administration officials implicated in the Iran-Contra
arms-for-hostages scandal including former national security adviser
Vice-Admiral John Poindexter and the White House aide Marine Lt Col Oliver
North.

The Iran-Contra scandal has led to still unresolved questions about the role of
Vice-President George Bush.

The timing of Mr McFarlane's appearance in court is a blow to Mr Bush whose
high-riding campaign for the Republican presidential nomination only just
appeared to have escaped the scandal's tentacles.

Mr McFarlane's plea bargain may, however, have come too late to help Mr Bush's
main Republican rival, Senator Robert Dole of Kansas.  Senator Dole has
exploited public doubts about the Vice-President's statements on his role in the
affair to some effect, though the issue did not save him from defeat in this
week's Super Tuesday elections.

However, the Democrats are certain to use major new Iran-Contra disclosures if
Mr Bush is the Republican nominee in the November election.

Mr McFarlane faces a maximum sentence of one year in jail and a Dollars 100,000
fine for withholding information from Congress.  His deal with the special
prosecutor, Mr Lawrence Walsh, means that a 14-month criminal investigation
could result in a criminal court case this year.

For some months, Mr Walsh has targeted for indictment Mr Poindexter, Lt Col
North and others involved in the US sale of weapons to Iran in return for
American hostages in Lebanon and the subsequent diversion of profits to the
Contra rebels in Nicaragua.

Mr McFarlane, President Reagan's national security adviser between 1983-85,
attempted to commit suicide last year before he was summoned to give evidence to
the joint congressional panel investigating the scandal.

Last May, unlike other witnesses, he testified without immunity to the House and
Senate committee and thereby laid himself open to criminal charges.

During his appearance last year, Mr McFarlane conceded that he had been less
than frank with congressional committees investigating in 1985 whether the White
House was trying to skirt a congressional ban on US military aid to the Contras.

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                        Financial Times (London,England)

                            March 17, 1988, Thursday

Poindexter And North Indicted On Iran-Contra Charges

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 381 words


Two former senior White House aides, Rear Admiral John Poindexter and
Lieutenant-Colonel Oliver North, were indicted yesterday on criminal charges
stemming from the Iran-Contra scandal.

The long-awaited charges bring to a climax a 15-month criminal investigation
into the secret sale of arms to Iran and the diversion of profits to the
Nicaraguan Contra rebels which grew into President Reagan's worst foreign policy
crisis.

A highly publicised criminal trial could have an impact on this year's
presidential race, where the Republican Party favourite, Vice-President George
Bush, faces questions about his role in the scandal.

Admiral Poindexter and Col North, with two of their business associates, retired
Air Force Major General Richard Secord and the Iranian-born arms dealer Albert
Hakim, was charged in a 101-page indictment with wire fraud (telecommunications
fraud), theft of government property and illegally conspiring to defraud the US
Government.

The three counts of conspiracy to defraud the Government together carry maximum
penalties of 25 years imprisonment.  Each charge carries a maximum fine of
Dollars 250,000 (135,000 Pounds (pds)).

Col North, who was sacked from his job as a middle-level national security aide
in November 1986 when the scandal came to light, was charged on 16 counts.
Admiral Poindexter, who resigned as President Reagan's national security adviser
at the same time, was indicted on seven counts.

The indictments follow a plea-bargain struck last week between the special
prosecutor leading the criminal inquiry, Mr Lawrence Walsh, and Mr Robert
McFarlane, another former national security adviser to Mr Reagan.  Mr McFarlane,
who is expected to be a key prosecution witness in a future trial, pleaded
guilty to four lesser counts of withholding information from Congress.

Much of the detail of the Iran-Contra scandal emerged during last year's
marathon congressional hearings which resulted in a 700-page report that
censured the Reagan Administration and suggested there had been a cover-up of
the affair.

One of the overriding questions centred on the President's knowledge of the
illegal diversion of arms sales profits to the Contras.

Col North yesterday denied any wrongdoing and said he would win in the
courtroom.

LANGUAGE: ENGLISH

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                            March 17, 1988, Thursday

Simon's Victory Confuses Democratic Race

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 641 words


Senator Paul Simon's clear victory in the Democratic primary in Illinois on
Tuesday adds a new layer of confusion to the already muddled race for the
party's presidential nomination.

The victory was the first for Mr Simon in 29 contests so far.  It has had the
effect of reviving the campaign of a candidate widely seen, even by almost half
of those who voted for him yesterday, as having no real chance of being the
nominee while weakening the position of the nominal front runner, Governor
Michael Dukakis of Massachusetts.

Governor Dukakis organised early in Illinois and spent more than Dollars 250,000
in the state in the final week but ended up with only 17 per cent of the vote
and no delegates.  He still holds a small lead in the pursuit of the 2,082
needed to win nomination.

The Rev Jesse Jackson's performance in Illinois, a state in which he launched
his own civil rights organisation 21 years ago, also fell a long way short of
expectations.  He won 31 per cent of the popular vote, but only some 37
delegates compared to 42 per cent and 136 respectively for Mr Simon.  These
mainly came from three of Illinois' 21 congressional districts in which blacks
are an overwhelming majority of the population.

On the other hand he can look forward to going into the next test for the
candidates, the Michigan caucuses on March 26, with the Democratic field still
splintered and the state's white vote divided among them.

The net result of the Illinois primary is thus to increase the likelihood that
when the primary season is over none of the candidates will control enough
delegates to go into the party's convention in July able to win nomination on
the first ballot.

Amid rising concern in the party that a bitter and televised battled for the
nomination could take place on the convention floor, Mr Paul Kirk, the chairman
of the Democratic National Committee, has called for a "summit" meeting of
candidates to take place immediately after the last two key primaries in
California and New Jersey on June 7.

Mr Kirk's goal will be to secure agreement among candidates on who should be the
nominee even if none of them has a clear majority.  Such an accord will not be
easy to arrive at, however, if several candidates are closely bunched in terms
of their delegate support.

The man most frequently mentioned as a potential nominee in the event of a
stalemate is Governor Mario Cuomo of New York.  He is still insisting that the
party nominee should be one of the current candidates and is sticking to his
decision that he is not in the race.  But he has yet again postponed a decision
to endorse one of those who are.

On the Republican side Illinois produced another landslide in favour of the
front-runner, Vice-President George Bush and another disaster for Senator Robert
Dole, now under increasing pressure from other Republicans to drop out in the
interests of party unity.

Mr Bush won an estimated 55 per cent of the popular vote and 62 of the delegates
at stake compared to 36 per cent and around 20 delegates for Mr Dole and 7 per
cent for Mr Pat Robertson, the former television evangelist, who is indicating
that he has begun to focus his attention on the 1992 nomination battle.

Mr Dole, however, is saying that he intends to carry on challenging the
Vice-President, certainly until the Wisconsin, primary on April 5.  According to
the Associated Press count, Mr Bush already has the support of 769 delegates and
Mr Dole only 183, with 1,139 needed.

There is speculation that he is hoping that indictments of other prominent
participants in the Iran/Contra scandal, expected any day, will finally begin to
erode the Vice-President's credibility as a candidate on the grounds that Mr
Bush has failed to explain fully his knowledge of the events surrounding the
arms for hostages dealings with Iran.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             March 18, 1988, Friday

Iran-Contra Charges Pose Pardon Dilemma For Reagan

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 532 words


The 23 criminal charges filed this week against two former senior White House
aides and two other participants in the Iran-Contra affair amount to the most
serious indictment of US government officials since the Watergate scandal in
1974.

The charges against Marine Lieutenant Colonel Oliver North, Rear-Admiral John
Poindexter and the two others bring to a head a 15-month investigation which
spanned three continents.

The three were yesterday ordered by Judge Gerhard A Gesell, who will try the
case, to appear on March 24 for arraignment.  An arraignment is the first step
in the US legal process where defendants hear the charges facing them and enter
pleas.

The Iran-Contra scandal centres on the secret White House operation to sell arms
to Iran in exchange for American hostages in Lebanon which grew into a scheme to
divert the profits to the Nicaraguan contras during a 1984-86 congressional ban
on US military aid to the rebels.

Thus far the scandal has been painted as an historic political struggle between
the executive, headed by the President, and the US Congress, each laying claim
over foreign policy-making.

The charges, filed on Wednesday by a court-appointed special prosecutor Mr
Lawrence Walsh, make no such high claims: they allege private profiteering at
the expense of the public interest, and hence criminal, behaviour by Col North,
Adm Poindexter, and the two middlemen, retired US Air Force Major General
Richard V Secord and the Iranian-American arms dealer, Mr Albert Hakim.

Because Col North and Adm Poindexter's main defence is that they were carrying
out the President's orders, their lawyers are certain to mount lengthy legal
challenges which could postpone a trail until early next year, after President
Ronald Reagan leaves office in January.

Shortly after Col North was indicted on 16 charges ranging from fraud to
obstruction of justice and receiving illegal gratuties, he told reporters in
Washington: "I will never give up.  We will win."

Col North's lawyer, Mr Brendan Sullivan, threatened to call upon high-level US
officials to testify if the case came to trial.

Mr Sullivan's comments amounted to the clearest appeal yet to Mr Reagan to use
the broad powers granted a President under the US Constitution to pardon the
defendants.  Mr Reagan has declined to show his hand; but few doubt he still
believes his senior aides, both of whom, along with Mr Secord have distinguished
military records, did not break the law.

The problem is that a pardon itself - rather than a trial in the remote future -
has become a political issue in the US; all the more so because of the
presidential election campaign this year and the still unanswered questions
about the role in the affair of Vice-President George Bush, favourite for the
Republican Party's nomination.

If Mr Reagan goes ahead with a pardon, he risks accusations that he pre-empted a
criminal trial to protect Mr Bush against a democrat nominee seeking to
capitalise on the scandal during the election campaign.  There must be a good
chance that he will wait until after the November election, which would make the
pardon one of his final - and most delicate - decisions.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             March 21, 1988, Monday

The Monday Page;
Uncertain Spring In Washington

BYLINE: Anthony Harris, Washington

SECTION: SECTION I; Pg. 17

LENGTH: 1142 words


Washington presents a confusing spectacle this spring.  The politicians are
circling an increasingly powerless President warily, like lesser beasts edging
up to the carcass of a lion.  They think he's dead, but they're not sure.  The
economy is rather like the weather, consistent only in making fools of the
forecasters.

The dramas of Central America generate only the temporary excitement of a James
Bond film, because everyone knows how the plot will end: both the Contras and
General Noriega are beaten, and it is only a matter of waiting for them to admit
it.  At least the riots and the arranged parachute drops provide a distraction
from the increasingly boring Iran-Contra affair, which has become a drama
without heroes now that Colonel North comes over more and more like a petulant
child.

At least the indictments fit neatly into the spring scene in one respect: this
is the season of charitable giving, and the friends of the Colonel, of Mr Lyn
Nofziger, and of the other more likeable among the accused in this and other
scandals, are appealing for contributions for their defence.  They are mainly
doing this privately, because all the noise is made by worthier causes - public
broadcasting, famine relief, child welfare and even (sotto voce) broadcast
evangelism.

These appeals can catch a large audience because most Americans are spending
their evenings at home at the moment trying to fill in their tax forms, and
social life is more than half dead.  Tax reform has made the job much harder
than usual this year - even the Internal Revenue Service officials who man the
telephones are getting nearly half the answers wrong.

All the same, one point has been cleared up: gifts are still deductible,
provided they are itemised.  It is also still true that nearly all taxpayers can
expect a big rebate, and that is the target for charity.  British charities
might do well to follow this fiscal example; the rich have never had so much to
give.  (Deductibility at 40 per cent is also appealing, since the Government can
be made to contribute to causes which get cut down in the public spending White
Paper).  The responses appear to be generous: this is an attractive face of
Reaganomics.

A more characteristic glimpse is offered in a book shortly to be published,
which describes Mr Reagan presiding at a Cabinet discussion of the Japanese
technological threat: "His head was down on his chest, and he appeared to be
asleep." The witness is Mr Clyde Prestowitz, who was the US trade negotiator
with Japan (he actually speaks the language) until he resigned in an
understanable huff in 1986.

Mr Prestowitz, to judge by the brief extracts which have so far been leaked, is
a mercantilist rather than a protectionist.  Perhaps inadvertently, he makes it
clear that the Administration is much more genuinely devoted to free trade than
some of its actions might suggest.  Mr Prestowitz did not approve of this
position.

For example, he wanted not just to break down barriers to US exports, in which
he had full support, but to bargain for specific market shares and trade
volumes.  This, he found, would violate what he calls "free trade doctrine"
(which of course it does).  He discusses trade in terms of "conquest" and
dismisses rival views as "highly theoretical."

While it is good to know that the Administration has lived up to its rhetoric,
at least in internal arguments, nobody would now build much hope on this fact
alone; the Administration can no longer defend its doctrinal corner very
effectively.  Mr Prestowitz clearly believes that his memoirs are timed for
maximum embarrassment, and will help the cause of a more aggressive trade stance
in Congress, which is now trying to get seriously to grips with the monstrous
Omnibus Trade Bill.

There are two or three solid-looking reasons for hoping that Mr Prestowitz will
fail, though none of them are entirely reliable.  The most important politically
is the apparent failure of Republican Richard Gephart's attempt to play the
trade card in the primaries.  Even his trade union backers seem to have given up
any hope for him, and unless he makes a spectacular comeback (Michigan might
offer his best hope), there will be little general excitement about trade.

The nature of the Omnibus Trade Bill should also prove a strong anaesthetic.  It
is a huge candelabra of a measure, and its various details are being considered
by no less than 17 Congressional committees.  Virtually nobody has a grasp of
the whole thing, and some people have not even tried.  One senior consultant was
quite put out by the Gephardt flop on Super Tuesday.  "I'd been relying on a
veto," he told me.  "Now I'm going to have to try to read the thing."

Finally, US manufacturers are beginning to rediscover their interest in free
trade.  In the struggle to fulfill record orders, especially for exports, they
are increasingly angry to find themsleves hampered by shortages of goods which
have been protected by quota restrictions or voluntary restrains in recent
years, from memory chips to aluminium and special steels.

As a result, their representatives have been willing to take on the
protectionists in public debate on the issue which is now heading for some
important votes; the ratification of the US-Canadian Free Trade Area.  This is
hardly a hot topic with the public; the debate in question was broadcast at 6.30
am.

It is occupying some rather depressing Congression time, in which Cabinet
members, headed by the Secretary of the Treasury, have to respond to detailed
questions about such matters as plywood specifications and rival subsidies for
the production of lead, but it will probably be ratified without any very
important changes: it looks like the beginning of a trade strategy to counter
the consolidation of the EEC, which is attracting a good deal of attention here,
and it promises energy security.

Above all, Congress wants to wrap up its unfinished business, which after all
includes the Budget, and go out campaigning; and the national neurosis about
trade has abated for the moment, though a bad set of trade figures could revive
it.  There is also a card which has not yet been played: burden-sharing.

Although Professor James Kennedy no longer appears on every other chat show to
explain his theory of the decline of economic empires, his book on the subject
has changed the way many people think.  His thesis is that dominant powers take
on military commitments which hamper the economies which support them; it is now
fashionable to point out that the US trade deficit neatly matches a carefully
chosen measure of the US contribution to the defence of other countries.  The
idea that allies should pay for their own umbrellas used to be the one-man
obsession of Senator Sam Nunn; now it is no longer even controversial.  You have
been warned.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             March 21, 1988, Monday

North And Poindexter Indicted Over Iran Arms

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 74 words


President Reagan's former national security aides, John Poindexter and Oilver
North, were indicted on criminal charges stemming from the Iran-Contra scandal,
Special Prosecutor Lawrence Walsh said in Washington.

Mr Walsh said the two men and two of their business associates were charged with
illegally conspiring to defraud the US Government in the secret arms sales to
Iran and the diversion of profits to Nicaragua's Contra rebels.

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                        Financial Times (London,England)

                             March 25, 1988, Friday

Nicaraguan Ceasefire;
Washington Stunned At Positive Turn On Most Divisive Foreign Issue

BYLINE: Lionel Barber

SECTION: SECTION I; Pg. 4

LENGTH: 568 words


The initial reaction in Washington yesterday to the ceasefire was stunned
silence, writes Lionel Barber.

Few officials had dared predict that the first-ever direct talks between the two
warring parties on Nicaraguan soil could take such an apparently positive turn.
What is so striking is the contrast between the flexibility shown in Sapoa,
where the talks were held, and the inertia characterising Washington's policy
towards Nicaragua.

It is hard to think of a foreign policy issue which has divided the US more
deeply during the presidency of Mr Ronald Reagan than that of Nicaragua; the
policy paralysis of the last six months is largely a result of those divisions.

In spite of the presence of the regional peace plan devised by President Oscar
Arias of Costa Rica, the Reagan Administration has stuck to the line it has
pushed for the past seven years: that only a US-backed Contra guerrilla force
can avert a communist beach-head in Nicaragua fomenting instability throughout
the region.

This argument retains wide support in the US, in particular in the South, which
is vulnerable to a refugee wave from Central America.

However, the Contra cause - unlike that of the Afghan rebels - has never
captured the hearts of the American people, nor the US Congress which have swung
like a pendulum on the question of US military aid.  Many Democrats have voted
for Contra aid to avoid being labelled soft on communism.

The Democrat victory in the 1986 mid-term elections, followed by the Iran-Contra
arms scandal, itself a direct consequence of the bitterly partisan Nicaraguan
policy, changed the nature of the game.

The scandal - revolving around a secret White House operation to trade arms to
Iran in return for US hostages and to divert the proceeds to the Contras -
crippled the Administration for at least nine months.  Congress stepped into the
vacuum.

The most striking example is the role of the House Speaker, Mr Jim Wright of
Texas, who has turned himself into a mini-Secretary of State.  It was the
Spanish-speaking Mr Wright who, last August, inserted himself into the Central
American peace talks to ensure that the Sandinistas came aboard.

Since then, Mr Wright, helped by Senator Christopher Dodd of Connecticut, a key
member of the Senate Foreign Relations committee, has advised the Sandinistas on
negotiating tactics, on the political landscape in Washington, and, to some
extent, on the timing of domestic Nicaraguan political concessions.

Mr George Shultz, US Secretary of State, has called Mr Wright's activities
extraordinary.  However, Democrat supporters argue that their efforts were vital
to keep the regional peace process moving - and the appearance of movement was
largely instrumental in sinking President Reagan's Dollars 36 m Contra aid
package at the end of February.

The Reagan Administration's dispatch of 3,200 troops to Honduras - to counter a
Sandinista incursion against Contra base camps - now looks like the last pitch
for military aid.

On hearing the news from the Sapoa talks, a spokesman for Mr Wright said that
the House of Representatives would draw up a package of humanitarian aid only -
comprising food, medicine and clothes - possibly as early as next week.

The question which Mr Wright and others in Congress are asking, is at what point
the US, the most powerful player in the region, will engage in the diplomatic
dialogue?

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                        Financial Times (London,England)

                            March 29, 1988, Tuesday

Iran-Contra Prosecutor In Deal With Israel

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 6

LENGTH: 256 words


The special prosecutor investigating the Iran-Contra scandal and the Israeli
government yesterday ended a year-long battle over sensitive information
relating to the affair and announced a joint agreement on co-operation.

The secret accord covers the role of four Israelis, among them two senior
government officials, in the sale of US weapons to Iran in exchange for American
hostages held in Lebanon between 1985 and 1986.

In Washington, special prosecutor Mr Lawrence Walsh's spokesman declined to
confirm or deny that Mr Walsh had dropped subpoenas against the four Israelis as
part of the agreement.  Nor would he confirm that Israel had merely submitted
its own account - rather than original records - of key financial aspects of the
affair.

The information provided by Israel is likely to be used in the forthcoming
criminal trial of two former senior White House officials, Lt Col Oliver North
and Rear Admiral John Poindexter, and two of their business associates.  All
have been charged, among other things, with conspiracy to defraud the US
government.

Mr Walsh, who last year subpoenaed the four Israelis in an effort to gain access
to information, said he was satisfied with the agreement, which would remain
secret.

It remains uncertain if Mr Walsh was able to prise out of the Israelis the
financial records of the four Israelis: Mr David Kimche, a former foreign
ministry director; Mr Amiram Nir, a counter-terrorism adviser to the government;
and two businessmen, Mr Yacov Nimrodi and Mr Al Schwimmer.

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                        Financial Times (London,England)

                            March 29, 1988, Tuesday

Israel To Aid Iran Probe

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 33 words


After more than a year of negotiations, Israel and the US prosecutor
investigating the Iran-Contra scandal announced they had signed an agreement
covering Israel's co-operation in the probe.

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                        Financial Times (London,England)

                           March 30, 1988, Wednesday

Dole Opts Out Of US Race

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; Front Page; Pg. 1

LENGTH: 553 words


Senator Robert Dole of Kansas yesterday quit the US presidential race, assuring
that his archrival Vice President George Bush will be the Republican Party's
candidate.

Senator Dole's withdrawal leaves the Republican nomination clear, in contrast
with the confused Democratic campaign where a firm front-runner has yet to
emerge.

Mr Bush's nomination was inevitable after he trounced the Kansan Senate minority
leader in the March 8 "Super Tuesday" voting, winning 16 out of 17 states and an
unassailable lead in the number of delegates backing him.

However, it was only yesterday in Washington, where he has spent the last 27
years as a Congressman and Senator, that Mr Dole conceded victory to Mr Bush and
pledged his future support to the Vice President.

Flanked by his wife Elizabeth, the former Transportation Secretary, and his
daughter Robin, Senator Dole told cheering supporters: "I have been beaten
before and no doubt will be again.  But I have never been defeated, and never
will be."

It appeared to be a wrenching personal moment for a man who, as a young infantry
private, lost the use of his right arm after storming a German machine-gun nest
in World War Two.  At 64, Senator Dole will probably not get another chance to
run for the presidency.

Throughout his campaign, Senator Dole had spoken out for a caring Republican
party which could open its ranks to the under-privileged, the dispossessed and
the minorities.  The message helped him to an early win in Iowa, but too often
it was obscured by a disorganised campaign which led to overspending and
infighting among staff.

By contrast, Mr Bush's campaign was better organised with much financial
backing.  The decisive factor was Mr Bush's ability to cast himself as the
natural heir to President Ronald Reagan which underpinned his triumph in the
predominantly southern primary and caucus Super Tuesday elections.

Senator Dole often criticised Mr Bush for hiding behind President Reagan and
accused him of lacking leadership qualities.  But yesterday he appeared ready to
drop what was turning into a blood feud in the interests of party unity in the
November presidential and congressional elections.

Appearing in the Senate Caucus Room, scene of the Watergate and Iran-Contra
arms-for-hostage scandal Congressional hearings, Senator Dole told his
supporters: "The bottom line is keeping the White House Republican."

Mr Bush now has seven months to prepare his already formidable campaign
organisation for the November run-off against the Democratic nominee.

The only remaining Republican candidate, the Rev Pat Robertson, the former
television evangelist, has conceded the nomination to Mr Bush, though he has
vowed to stay in the race until the Republican national convention in August in
New Orleans.

The Democratic race was thrown into upheaval last weekend after the Rev Jesse
Jackson staged an upset win over Government Michael Dukakis in the Michigan
caucuses.  Until then, Mr Dukakis - who, like Mr Bush, is strong on money and
weak in message - had appeared to be the favourite.

Mr Jackson was hoping to boost his chances with a strong showing in the
Democratic poll in Connecticut.

Mr Jackson, a former civil rights leader and black Baptist preacher, is
neck-and-neck in the delegate count with Governor Dukakis.

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                        Financial Times (London,England)

                           April 13, 1988, Wednesday

Senate Majority Leader To Step Down

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 218 words


Senator Robert Byrd of West Virginia, the Senate majority leader, said yesterday
he would not seek re-election to the post.

His decision to step down opens up a race for the US Senate's most powerful and
influential job among the upper chamber's 54 Democratic senators.

The three leading contenders are Senator Daniel Inouye of Hawaii, who co-chaired
the Congressional inquiry into the Iran-Contra inquiry last year; Senator
Bennett Johnston of Louisiana; and Senator George Mitchell of Maine, one of the
stars of the Iran-Contra hearings.

Senator Byrd, 70, has been Senate majority or minority leader for the past 12
years.  He resumed the job of Senate majority leader after the mid-term
elections in 1986 when the Democratic party regained a majority.

His untelegenic appearance and his prickly manner left some Democrats yearning
for a younger and more dynamic leader.  On occasions during the 100th Congress,
Senator Byrd - who first entered the US House of Representatives in 1953 - has
found himself upstaged by the more aggressive Mr Jim Wright of Texas, the House
Speaker.

Senator Byrd will run for re-election to his West Virginia seat in November.
Assuming he wins and the Democrats remain in control of the Senate, he will
become chairman of the Senate Appropriations Committee.

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                        Financial Times (London,England)

                           April 13, 1988, Wednesday

Saudi Arabia 2;
Moves To Forge New Links

BYLINE: Andrew Gowers

SECTION: SURVEY; Pg. II

LENGTH: 814 words


Saudi Arabia's dealings with the superpowers appear to be slowly entering an
intriguing new phase.

On the one hand, the Kingdom's special relationship with the US has emerged,
battered but still solid, from the trials of recent years.  On the other, Riyadh
is throwing out tantalising hints of rapprochement with, or at least intense
interest in, Mr Mikhail Gorbachev's Moscow.  In time, though perhaps not during
King Fahd's reign, the result may be a significant Saudi shift towards more
balanced relations with the US and the Soviet Union.

The alliance with the US, though close for much of the last 40 years, has never
been entirely free from tension.  It may have become as acute as ever this month
with Riyadh's evident indignation over US complaints about its secretive
purchase of long-range missiles from China and its unprecedented request to
Washington to replace its ambassador who had delivered a formal protest.

Over the last decade, the Saudis have, as they see it, gone out of their way to
co-operate and ingratiate themselves with the Carter and Reagan administrations
- using their oil power to keep prices lower than they might otherwise have gone
in the early 1980s; providing financial help for what the Reagan administration
regards as good political causes such as the Afghan mujahideen and the Contra
rebels in Nicaragua, and so forth.

But they have been repeatedly disappointed and embarrassed by the problems they
have experienced in buying arms from the US.  They are also bewildered by the
frequent twists and turns of American foreign policy, and harbour severe doubts
about the long-term reliability of the US as a partner - in this respect, the
Iran-Contra affair was a serious blow to the Saudis.

The US, for its part, has been infuriated in the past by the Saudis' failure to
put their muscle behind American Middle East peace initiatives (of which the
Camp David accords are the most obvious example).  Some officials and
legislators are constantly irritated that Riyadh refuses to bring its security
co-operation with the US into the open by providing base facilities for American
forces.  Residual suspicions linger of Saudi oil power as a malign force.

Some of these frictions have been eclipsed in the past year.  Saudi Arabia has,
for example, quietly but firmly endorsed Kuwait's decision to seek naval
protection for its oil tankers and the associated US military build-up in the
Gulf.

The Saudis are pleased, too, to have been fully consulted in recent weeks on the
Arab-Israel peace plan advanced by Mr George Shultz, the US Secretary of State.

But it would be wrong to think that the Saudi doubts about American constancy or
even-handedness have been banished.  Riyadh last autumn pressed Washington to do
more to protect freedom of Gulf navigation, arguing that by escorting only
US-flag vessels the US Navy had succeeded in concentrating attacks on other
tankers, including those belonging to Saudi Arabia.  The request was politely
rebuffed, and the Americans have since slightly reduced their naval presence in
the Gulf.  And the Saudis still worry about the prospects in the event of an end
to the Gulf war and a subsequent withdrawal of the US fleet.

Above all, the key problem in the relationship - the Arab-Israel conflict -
continues to fester, notwithstanding Mr Shultz's efforts.  To a man, Saudis
believe that the Palestine issue - the fate of the Palestinians themselves and
the crucial question of the future of Jerusalem, Islam's third holiest site -
lies at the root of most of the Middle East's current troubles.  As Americans
too often fail to appreciate, there are distinct constraints on Saudi Arabia's
ability to parade its friendship with Israel's chief financial and military
supporter.

These concerns have in the last few years caused the Saudis to seek stronger
trade and political relations with the European Community.

But there is also a great deal of talk in the Kingdom these days about taking
the process two steps further by resuming formal relations with the Soviet Union
- suspended in 1938 - and opening ties with China.  Trade and other contacts
with the Soviets have been intensifying, with Prince Saud in Moscow for his
first visit in five years earlier this year.  The Kingdom's links with China
were highlighted last month by the news that Peking has been supplying the
Saudis with its CSS2 missiles which have the range to hit in Israel.  There
seems a strong prospect that diplomatic relations might be established in the
near future.

Religious traditionalists are fiercely opposed to relations with the atheist
regimes in Moscow and Peking and the Al Saud's suspicion of the Soviets remains
strong, especially in the light of their Afghan adventure.  But many educated
Saudis argue that broadening the Kingdom's links in this way would enhance its
international influence.

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                        Financial Times (London,England)

                             April 15, 1988, Friday

Shultz's Indian Summer

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 1057 words

HIGHLIGHT:
The Secretary of State rides high, says Lionel Barber


These days, Mr Geroge Shultz has a bounce in his gait and a twinkle in his eye.
Rarely during almost six years as US Secretary of State has he so publicly
enjoyed his job; but then rarely has he enjoyed such ascendancy in the Reagan
Administration.

This is Mr Shultz's Indian summer.  Most of his conservative tormentors inside
the White House and Pentagon have departed, leaving him in command of a foreign
policy agenda which is crowded even by Washington standards.

Yesterday he was in Geneva, signing an accord on the Soviet withdrawal from
Afghanistan.  Next week, he leaves for another round of talks with his opposite
number Mr Eduard Shevardnadze to prepare for the Moscow summit between President
Reagan and Mr Gorbachev in May.  Last week, he was shuttling around Middle East
capitals promoting his own regional peace plan.

A very different picture of Mr Shultz's power and influence emerged last summer
during the Congressional hearings into the Iran-Contra scandal.  Here was an
experienced public servant (he was Labour Secretary and Treasury Secretary in
the Nixon administrations) constantly undercut by his colleagues, ignored on the
key policy initiative of selling arms to Iran in return for hostages, and once
labelled by a suspicious conservative opponent as a "candyass."

In Washington's power-games, Mr Shultz chalked up a losing streak which would
have made even the current Baltimore Orioles baseball team blush.

Mr Shutz's public confessions of impotence during the hearings were probably no
more than a manoeuvre to extend his power within the bureaucracy.  Indeed, over
the past 15 months, the death of Mr William Casey, the CIA director; the
resignation of Mr Caspar Weinberger, US Defence Secretary; and the forced
departure of Mr John Poindexter, President Reagan's national security adviser,
have helped him consolidate that power.

Regular weekly meetings, whenever possible now take place between Mr Shultz, Mr
Howard Baker, White House chief of staff, Mr Frank Carlucci, US Defence
Secretary, and General Colin Powell, the newish black national security adviser
who is tipped as a future chairman of the Joint Chiefs of Staff.

This quadrumvirate is characterised by a pragmatic, non-ideological approach to
foreign policy which is light years from the rhetoric and action of the first
Reagan administration.

This suits Mr Shultz who largely resists attempts to infuse policy-making with
ideology.  The one exception is Central America where he is a hawk.  He backs
military aid to the Contra rebels in Nicaragua and reportedly favours some form
of military intervention to oust the Panamanian strongman General Noriega (much
to the annoyance of the far more cautious Pentagon).

Some speculate that Mr Shultz's consistent hard-line against the
Marxist-oriented government in Nicaragua is a hangover from his days as a
gung-ho marine from his native New York; others believe that it serves as a
lightning rod to distract conservatives from his real aim which is an
improvement in relations with the Soviet Union.

One of the most memorable moments of the Reagan presidency came in October 1986
in Reykjavik when Mr Shultz informed the awaiting world press that a sweeping
strategic nuclear arms control deal between Mr Reagan and Mr Gorbachev had
foundered on the issue of the US "Star Wars" missile defence system.  Even the
normally inscrutable Mr Shultz could not hide his disappointment as he stared,
exhausted and punctured, into the television cameras.

Mr Shultz naturally denies that he or anyone else in the Administration is
pursuing arms control pacts with the Soviets no matter what the cost.  Yet the
pace of the superpower talks on reducing nuclear weapons arsenals has
accelerated dramatically since Reykjavik.

In Washington last December, both sides agreed to eliminate their medium and
shorter range nuclear missiles, the first superpower agreement of the post war
era to dismantle a whole class of nuclear weapons and one which will shortly be
ratified by the US Senate.

In Moscow in May, Mr Reagan and Mr Gorbachev hope to reach at least an outline
deal on cutting their strategic ballistic missile arsenals by up to 50 per cent.
The chances are currently rated as quite good of producing a deal similar to the
one signed in Vladivostok between President Ford and Mr Brezhnev in November
1974.

Unlike some of his more headline-conscious colleagues, Mr Shultz has actively
tried to avoid elevating arms control issues to the exclusion of human rights
and regional conflicts which he considers to be fundamental to and co-equal in
the superpower relationship.

And yet he is capable of playing the East-West dialogue in a different way.
After Mr Shevardnadze's last visit to Washington, Mr Shultz, briefing reporters,
singled out for criticism Soviet opposition to the US plan for an international
peace conference with limited powers as a prelude to direct talks between Israel
and the Arabs.

At first sight, the US Secretary of State seemed to be appealing to Moscow to
support a peace initiative to which he has given a strong personal commitment;
in fact, officials say he is so disappointed with the lack of new Soviet arms
proposals that he intended a blunt signal to the Soviets: no progress on arms,
no seat at the Middle East peace table.

The success or failure of another major arms deal will probably prove the
decisive measure of the Shultz era, far overshadowing, in the near-term, the
likely failure of his Middle East initiative and the unrest brewing in Central
America where disillusionment over vacillating US policy appears to be growing.

Mr Shultz's years have been marked by no great intellectual strategy in foreign
policy (strange given his abiding interest and command of economics).  But then
the sheer range of US interests in the world make it easy for a Secretary of
State to be caught up in day-to-day crisis management.

If Mr Shutz allows himself one pleasure, it is travel.  His itinerary in the
Soviet Union is a useful barometer for East/West relations.  He has persuaded
the Soviets to let him visit Kiev and Tbilisi, the old spa town and capital of
Georgia where the Stalin-era statues still dominate the skyline but where Mr
Shevardnadze, the former Georgian Communist Party boss and police chief, ought
to be the perfect host.

LANGUAGE: ENGLISH

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                            April 28, 1988, Thursday

Bush Goes On The Attack After Securing Nomination

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; American News; Pg. 3

LENGTH: 317 words


Vice-President George Bush won sufficient delegates in the Republican primary in
Pennsylvania on Tuesday night to ensure his nomination as the party's candidate
for the presidency.

He promptly challenged his likely Democratic rival for the White House, Governor
Michael Dukakis of Massachusetts, to "fire away" at him on the issue of his role
in the Iran-Contra scandal.

In interviews after locking up his party's nomination, a confident Mr Bush,
taking the stance that attack is the best form of defence, has said that the
Iran-Contra scandal has been fully investigated.

He suggested that to continue to raise questions about the affair reflected a
lack of understanding about the complexity of how foreign policy is formulated.
"The Democrats are a little short on foreign policy," Mr Bush said.

Mr Bush indicated that he would portray Mr Dukakis as a liberal Democrat whose
views link him inextricably to the failed policies of the last Democratic
President, Jimmy Carter.

Pennsylvania's primary brought Mr Bush's delegate total above the 1,139 he needs
to be nominated at his party's convention in New Orleans in August.  It also
seems to have had a decisive impact on the Democratic party's presidential
nomination race.  Governor Dukakis trounced the Rev Jesse Jackson, winning 66
per cent of the votes against 29 per cent for Mr Jackson.

This is expected to give Mr Dukakis 165 of the 178 delegates to the Democratic
convention at stake in the state.  Mr Dukakis is now estimated to control around
1,260 delegates compared with 865 for Mr Jackson his last remaining challenger.
It takes 2,081 delegates to win the Democratic party's nomination.

Although Mr Dukakis is well short of this goal, his victory in Pennsylvania
seems to have knocked the wind out of the Jackson campaign, which suffered
serious setbacks earlier this month, first in Wisconsin and then in New York.

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                        Financial Times (London,England)

                             April 29, 1988, Friday

Political Change In Panama Costs US Dear

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 8

LENGTH: 1023 words

HIGHLIGHT:
Lionel Barber reports from Washington on a Central American policy
miscalculation


After two months of economic sanctions, the Reagan administration's goal of
ousting Panama's strongman, Gen Manuel Noriega, remains as distant as ever.

What started as a bipartisan effort by the administration and members of
Congress to help Panama now looks like a botched job bordering on a debacle.
Amid an atmosphere of recrimination in Washington, a re-assessment of policy is
now unfolding.

US financial sanctions aimed at squeezing cash out of the Panamanian economy
have hurt the people more than the Noriega regime.  The economy is operating at
10 to 20 per cent, putting pressure on companies to lay off workers and
alienating the generally pro-US Panamanian middle class.  Back in Washington,
the Treasury has received 1,000 telephone calls from US citizens and businesses
based in Panama complaining about the sanctions.

Moreover, even if Gen Noriega and his drug-tainted entourage take the next
flight out of town, the US faces huge costs, possibly up to Dollars 1 bn, in
restoring confidence and liquidity to Panama's cash-starved banking system.

A senior US official reckons the administration faces two choices: take a bloody
nose and seek a Latin American-backed negotiated solution for Gen Noriega's
departure, or continue economic sanctions knowing that, the longer they appear
ineffective, the greater the pressure for US military intervention.  "That would
be the disaster everyone has sought to avoid," said the official.

A few well-aimed kicks to the dollar-denominated Panamanian economy were all it
was supposed to take to remove the general.  What went wrong?

The chief target for criticism is Mr Elliott Abrams, the US State Department
official in charge of Latin American affairs.  Panama was supposed to have been
his big moment, a chance to rehabilitate himself after his less than
distinguished role in the Iran-Contra scandal, the covert White House operation
to arm the Nicaraguan Contra rebels.

Some of the criticism is over-cooked.  Mr Abrams inherited a pro-Noriega policy
in 1985, which included tacit support in the US intelligence services and the
Defence Department for the general's drug dealings.  The general was seen as a
non-ideological ally in a politically stable, strategically vital, Central
American state.

"Several of these officials are still involved in policy-making which
compromises the whole policy of getting rid of Noriega," said a senior
Panamanian, anti-Noriega diplomat.

Mr Abrams may have tried to circumvent the obstructionists by privatising US
policy early this year.  He opened channels to Panamanian exiles and used an
experienced former State Department official and Washington lawyer, Mr William
Rogers, to represent what is now the government-in-hiding headed by Mr Eric
Delvalle, the figurehead president deposed by Gen Noriega in February.

In retrospect, his mistake may have been to pick Mr Delvalle as a credible
democratic alternative and accelerate what had been a gradual, Panama-based
effort to winkle Gen Noriega out of power.  Mr Abrams won a few short-term
friends in the narcotics-obsessed US Congress but he is now stuck with Mr
Delvalle, who was originally installed by the general.

It was Mr Rogers who devised the financial sanctions.  These sought to cripple
the economy by freezing, via court order, about Dollars 60 m of the Panamanian
government's deposits held by four US banks in New York.  Within days, banks in
Panama could not meet the panicky demand for cash and Gen Noriega ordered a
shut-down to avoid a disastrous run on deposits.

However, the financial sanctions were not followed by a concerted diplomatic
effort to encourage the general to step down and the administration also
underestimated the general's ability to survive and find the minimal cash
necessary to keep the country going.

US intelligence sources claim that some of these funds (about Dollars 20 m) has
come from Libya.  More recently the general did a deal with Mexico to mint
Dollars 15 m worth of new coins.

The next step could be an emergency clearing system, operated by other Latin
American countries, to allow Panama's banking to re-open.

Strange to tell, Panama's attempts to break out of Washington's economic
straitjacket come as the administration is loosening the straps.

Both the Treasury and the Federal Reserve, the US central bank, are acutely
aware of the damage done by the economic sanctions to Panama as an international
financial centre.  These include the recent invocation of the sweeping
International Economic Emergency Powers Act (previously used only against Iran,
Libya and Nicaragua).

The Treasury is close to completing a list of exemptions under the Act, as it
will apply to about 1,000 US businesses and 40,000 to 45,000 US citizens based
in Panama, many of whom have "screamed blue murder" in recent weeks.  US
officials deny this amounts to a retreat but they agree that a blanket ban on
companies paying tax to the Noriega regime makes no sense.  "It would jeopardise
US oil companies' activities in Panama and threaten air links between the two
countries," said one official.

The deepest irony at work is that, throughout the affair as for most of Panama's
history, the abiding US presence in the country and the Canal Zone has provided
the dollar liquidity which has kept the country going, albeit at reduced
activity during the current trouble.  Indeed, until the recent sanctions,
Panama's economic activity, legal and illegal, made it a consistent exporter of
dollars.

Among the myriad opinion-mongers in Washington, the consensus now leans in
favour of a negotiated settlement for Gen Noriega's departure to be attempted by
Latin Americans.  Mr Abrams's abrasive style is more suited to his native New
York than the diplomatic circles of Latin America, where he has few friends.
"Nobody wants to bail out Elliott," said a senior Latin American diplomat.

The general may not quit on anything but his own terms.

So the Central American sore continues to fester in a US election year, as the
eventual cost to the US taxpayer of repairing the tottering Panamanian financial
system continues to mount.

LANGUAGE: ENGLISH

GRAPHIC: Picture Abrams, Few friends in Latin American diplomatic circles

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                        Financial Times (London,England)

                             April 29, 1988, Friday

Hope Dawns For The Democrats

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; Editorial; Pg. 22

LENGTH: 2007 words

HIGHLIGHT:
Stewart Fleming, in Washington, examines the changing priorities of US electors


For months, Republicans have been sniggering behind their hands as they have
watched the Democratic Party try to choose the man who will lead them into
November's presidential election.

But Governor Michael Dukakis's sweeping victories in primary elections in New
York and Pennsylvania over the last two weeks have wiped the smiles off
Republican faces and are beginning to change the image of a party which in the
past has been perceived by voters as a fractious amalgam of competing interest
groups.

Polls indicating that Mr Dukakis would beat Vice President George Bush in a
presidential election suggest that the Republicans were premature in rejoicing,
earlier this year, at the Democratic party's discomfiture.  That is not all.
Both Republican and Democratic political analysts are coming to the conclusion
that November's election could be as close as that between Richard Nixon and
John Kennedy in 1960.

The past weeks have been a reminder of just how suddenly the political climate
can change.  A month ago, after the Reve Jesse Jackson, the black Democratic
candidate, won the Michigan caucuses, many Democrats believed their July
nominating convention risked turning into a prime-time advertisement for the
party's traditional disarray - perhaps even into a rerun of the chaotic 1972
convention which nominated Senator George McGovern.

It looked as if neither of the remaining white candidates, Mr Dukakis and
Senator Albert Gore of Tennessee (who has now withdrawn from active
campaigning), would arrive at the convention with enough delegates to claim the
nomination on the first ballot.  The result might have been a public wrestling
match with Mr Jackson - a man who is, for many Democrats, too, left-leaning, but
who has accumulated more votes in the primary campaign than any other candidate
except Mr Dukakis.

But today, Democrats are claiming that the mood in the party has changed
abruptly.  Even a Republican analyst such as Mr Kevin Phillips, a former adviser
to Richard Nixon, argues that the Republican should be concerned about their
prospects in November: "The Democrats may be in the process of putting together
their first coalition which moves beyond the issues agenda of the 1960s and
1970s."

Mr Norman Ornstein, a political scientist at the American Enterprise Institute,
a Washington think-tank, indentifies a new mood in the US.  He suggests American
voters are beginning to focus on a range of slowly emerging issues - a mixture
of family and economic factors, ranging from drugs and child care to education
and the international competitiveness of the American economy - which are
different from the issues which have helped to make the last 10 years a mainly
Republican decade.

But will it be the Democrats, rather than the Republicans, who use these issues
to their political advantage?  And will the new issues take precedence, in the
minds of the electorate, over the traditional concerns about peace and
prosperity?

On the face of it, five years of economic expansion under President Reagan and a
second detente with the Soviet Union should work in favour of the Republicans.

But Mr Kirk O'Donnell, President of the Centre for National Policy, a Democratic
party think-tank, says that a key for the Democrats could be the anxiety about
the economic future which is being reflected in the opinion polls.  "The
Democrats have got to get the focus on the future, the Republicans have got to
keep the focus on the past."

Mr O'Donnell is not alone in believing that the Democrats' chances of shifting
the focus to the future are far better today than they seemed a few months, or
even a week, ago.

A Republican public opinion pollster says that, when the public was asked after
the 1984 presidential election which party had the best ideas for the future,
the Republicans came out with a lead of around 20 percentage points.  Today, a
similar question asking for the party with the best ideas for the 1990s produces
a small Democratic lead.  "The Democrats have made tremendous strides in picking
up their credibility" with the electorate, he says.

Paradoxically the disorderly electoral process which has finally thrust Mr
Dukakis to the fore, and which Republicans were so enjoying, may turn out to
have helped the Democrats.

It has allowed Mr Jackson to make a truly historic breakthrough for a black
politician.  It gives him the opportunity to energise a traditionally solid
Democratic constituency, the blacks, in November.  No less importantly, Mr
Jackson's success, and his unrivalled charismatic appeal, has helped the public
to identify his party with a number of those newly-emerging issues which could
influence the outcome in November - the fight against drugs, child poverty and
the problems of the working-class poor (both black and white).

A few months ago many Democrats were very worried about whether Mr Jackson would
campaign for the Democratic ticket in November.  In 1984, when he ran an
unsurgent campaign against former Vice President Walter Mondale and lost,
neither side was able to do much more than reach a polite truce before the
presidential election.

This year however, Mr Jackson is presenting himself as the party healer, not the
rebellious outsider.  Mr Dukakis too, recognising that without party unity he
cannot expect to win the White House, has studiously avoided friction with the
Jackson campaign.

Mr Dukakis faces a formidable test of his political legerdemain in the weeks
ahead, first as he continues to compete with Mr Jackson in the remaining
primaries and then as he makes the difficult choice of whom to select as his
vice-president candidate.

It is widely assumed, and hoped by moderate Democrats, that Mr Jackson will not
claim the vice-presidential slot for fear that his presence on the ticket will
give it too liberal a tilt and damage the party's prospects.  He would
undoubtedly be blamed for any loss and it could set back his own (and any black
candidate's) prospects of winning the presidency in the future.

But whilst satisfying Mr Jackson, strongly positioned on the left, Mr Dukakis
must simultaneously unite the right of the party.  Since 1984, the powerful
southern Democrats in particular have been arguing electoral disaster in the
south if it once again presents the American people with a ticket with a
northern liberal bias.

Mr Dukakis is being advised to choose a southern conservative running mate,
perhaps a man like Senator Sam Nunn (if he will accept the position) who can
give the ticket the credibility Mr Dukakis lacks on foreign policy and national
security issues; or Senator Bob Graham of Florida or Senator Lloyd Bentsen of
Texas who might help him win important states in the south.  Others argue that
the states of the Pacific coast will present the Democrats with the best
election prospects outside their traditional industrial strongholds of the north
east and midwest; that suggests the choice of a running mate from the west
coast.

Such tactical considerations could be decisive in a close election.  But what
grounds are there for believing that Mr Bush, the loyal legatee of the Reagan
economic record, will find himself fighting for the last few crucial votes in
November?

There is nothing in his record to suggest that he will outshine even the often
pedestrian Mr Dukakis on the stump.  He will have to fend off barbs about the
Iran-Contra scandal as he tries to exploit Mr Dukakis's vulnerability in foreign
affairs; and on domestic affairs he will find himself up against an experienced
television debater who has a technocrat's knowledge of the roles of state and
federal Government.

Second, as a member of the administration in office, Mr Bush is a potential
victim of any further political setbacks Mr Reagan may suffer at home or abroad.
For example, he cannot be feeling pleased either with the interest rise in
recent rates and signs of acceleration in the pace of inflation, or the
continuing controversy surrounding Attorney General Ed Meese.  Indeed his aides
are suspected of trying to force Mr Meese to resign.

At the same time, it is far from clear that Mr Bush he will get much of a boost
from any political victories the President may score - for example an arms
control accord with the Russians.  As Mr Ronald Brownstein wrote recently in the
National Journal "on arms control and relations with the Soviets, public opinion
is moving towards a bi-partisan consensus that defuses the issues' political
impact." Thus, although the Reagan legacy has stood Mr Bush in good stead with
those who vote in Republican primaries, it will be less of an advantage in
November.

Polling data suggests, indeed, that many Americans, aware of the flood of
foreign imports and investment, sensitive to the debate about their nation's
long term decline as a world power, and increasingly identifying American
strength with economic rather than military power, are not as impressed with the
Reagan record as they once were.  This is one reason why Democratic presidential
candidate Mr Richard Gephardt's "economic nationalism" struck a chord with
voters.

That a dry historical book such as Professor Paul Kennedy's The Rise and Fall of
the Great Powers should be at the top of the non-fiction best-seller list surely
says something about how Americans see themselves.  The message is not a
reassuring one for Mr Bush: the simple "peace and prosperity" record which he is
presenting to the voters may not be the powerful electoral magnet some
Republicans hope.

Alongside the changing perceptions of the relevance of the Reagan
Administration's successes, there is a growing awareness of the possible
importance of the Reagan Administration's failures and omissions, particularly
in the area of social policy.

Democrats are not making the mistake of framing these issues in the 1960s terms
of income redistribution for the poor.  Mr Dukakis is presenting the challenge
in terms of the need to invest in human capital, to create economic opportunity
and good jobs for all.  In this way his message includes not only the indigent
in the ghettos who can be made into productive contributors to the national
weal, but also the growing number of working-class voters, who feel economically
insecure.

The recent passage in both House and Senate committees of legislation to reform
the welfare system, the likely passage this year of legislation to provide
catastrophic insurance for the elderly, the increasing attention being paid to
the issue of national health insurance for the 37 m Americans who have no health
coverage whatsoever and the focus on the importance of day care and education to
the national economy - all are signs that national priorities are shifting to
concerns which have not been adequately tackled during the Reagan years.

It is of course, by no means a foregone conclusion that the Democrats will be
able to shape this particular debate to their political advantage.  Their task
will be particularly difficult if Mr Bush succeeds in his efforts to portray Mr
Dukakis as an old-style liberal Democrat lacking expertise in foreign policy - a
man who represents not the future but the failed policies of the Democratic
past.

Mr Dukakis has not yet presented a convincing programme tackling the Federal
budget deficit, without which even modest changes in Fenderal priorities will be
difficult.  Neither has Mr Bush.  He has signalled his awareness of the changing
political climate, however, by saying he wants to be known as "the education
President" - in succession to a man who came into office committed to the
abolition of the federal Department of Education.

In such ways, Mr Bush can add nuances to his inheritance from Mr Reagan -
enough, perhaps, to give him the best of both worlds come November.  Already,
however, the Democrats can congratulate themselves on one achievement: the
assumption that Mr Bush and his Republican Party will start the election
campaign with a distinct advantage no longer looks as a convincing as it did a
few weeks ago.

LANGUAGE: ENGLISH

GRAPHIC: Picture In contention, Governor Michael Dukakis, the Reverend Jesse
Jackson and Vice President George Bush

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                              237 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 4, 1988, Wednesday

Campaign Leaders Search For Key To The Making Of A US President

BYLINE: Linda Bilmes

SECTION: SECTION I; American News; Pg. 6

LENGTH: 1054 words

HIGHLIGHT:
Linda Bilmes, a professional political consultant, analyses the hunt for the
single question which could win or lose the prize


Now Mr Michael Dukakis has virtually secured the Democratic Party's nomination,
campaign leaders are concentrating on the question of how voters will choose
between him and Vice-President George Bush.

Neither man is charismatic; both are organised and shrewd.  They will pick
advantageous running-mates; they will not make obvious mistakes.  Broader issues
- the US economy, Iran-Contra, the Gulf war - may influence the climate of the
race.  The dilemma over the Rev Jesse Jackson - the votes to be gained or lost
by placing Mr Dukakis's main Democratic rival on the electoral ticket or
offering him a top cabinet post - will also affect Democratic chances.

However, in a close race, the decisive factor will be which candidate can
establish the framework for the choice - the single, critical question voters
ask themselves in the voting booth.

Past experience shows that the framework is pivotal in a tight contest, because
it is the lens through which undecided voters view the candidates.  In 1980, Mr
Ronald Reagan restricted the election to the question: "Are you better off now
than you were four years ago?" This deflected attention from Mr Reagan himself
to public dissatisfaction with the economy, providing the rationalise for
millions of blue-collar Democrats who were ambivalent towards the Republican
Party to vote against President Jimmy Carter without emotional commitment to Mr
Reagan.

Four years earlier, Mr Carter himself focused on the Watergate scandal,
directing voters' attention on President Gerald Ford's links to Mr Richard
Nixon.

The trick is to set up a winning framework before the opposition does.  To this
end, the Dukakis and Bush campaigns, using political consultants, pollsters and
psychologists, are dissecting the US electorate in search of ways to restrict
the election.

Both campaigns will identify a series of focal groups to find out what the
public is thinking about the election.  A psychologist/moderator will lead
discussions among groups of 10 to 15 independent and undecided voters in swing
states throughout the country.

A typical group spends 30 minutes on topics of general interest - the US
position in the world, the economy, foreign policy, confidence in the future.
In the next 30 minutes, the participants describe their personal experiences in
jobs, pay, taxes, homes, health care, and their outlook for personal prosperity.
For the final hour, voters express their opinions about the candidates.

Focal groups enable each campaign to construct a thought chain for undecided
voters.  A winning framework extends the existing thought chain one link further
so it culminates in a direction favourable to the candidate.

For example, in 1980 the original thought chain for swing Democratic voters
terminated in general dissatisfaction.  Mr Reagan's campaign extended the
thought process to comparative dissatisfaction so that voters would blame Mr
Carter for their unhappiness.

To frame the election successfully this year, the Dukakis and Bush staffs must
consider the attitudes of undecided voters on four variables: the preference for
change over the status quo; voters' willingness to take risks for possible gain
rather than risk aversion and safety at all costs; the degree of apprehension or
confidence toward the US economy; and the voters' tolerance for Bush the
incumbent - the percentage of voters who agree with the statement: "Given an
acceptable alternative, I'd just as soon vote against George Bush."

The best scenario for Mr Dukakis is for the thought chain of undecided voters to
flow in the direction of change, risk-taking, economic misgivings and anti-Bush
sentiment.  Then Mr Dukakis can narrow the election to the need for acceptable
change, forcing Mr Bush onto the defensive to dispute both the acceptability of
Mr Dukakis and voters' desire for change.

However, even with a thought chain that naturally favours Mr Dukakis, Mr Bush
could outmanoeuvre his rival and establish his own framework first.  Mr Bush
would have to dampen voters' desire for change by focusing on change - meaning
high taxes, liberal ideas, big government, inexperience - rendering Mr Dukakis
unacceptable to voters seeking an alternative.

Also, if undecided voters are leaning towards safety, the status quo and
economic complacency, Mr Bush has the advantage.  He can confine the contest to
the theme: America is on the right track, why bother getting off, why risk
another train?  and place Mr Dukakis on the defensive.

Then again, Mr Dukakis could evade this and direct thinking to Mr Bush.  Polls
suggest that undecided voters find him dull, bland, tainted by Iran-Contra and
custodial.  If Mr Dukakis puts the question: "Do I really want George Bush to be
my president?" then undecided voters will focus on Mr Bush's weaknesses and
those who prefer the status quo can vote against Mr Bush without perceiving
their choice as a vote for change.

The difficulty for both is that swing voters may both desire and fear change, be
risk takers and avoiders.  In that case, the candidates must simultaneously
shape the election favourably and reinforce the values underlying their
frameworks.

For Mr Bush, this means stressing the benefits of caution and safety - the man
who won't give up a tea towel to Mr Mikhail Gorbachev.  Mr Dukakis must
emphasise the intrinsic value of change - innovation, creativity, progress -
place himself as the man who can beat the Russians at chess by finding a new
move.

Both campaigns are scrambling to come up with a winning formula so their
candidate can be first to state: "The real issue in this election is ..." again
and again until, he hopes, the restriction sticks.  Voters would then be
bombarded with this message through every possible channel.

The Bush campaign has had a two-month start in which to perfect its research.
However, Mr Dukakis has the advantage that voters' attitudes to him are still
evolving and might be invalidating Mr Bush's findings.

The challenge for Mr Bush is to craft a framework flexible and clever enough to
transcend the emerging recognition of Mr Dukakis.

The challenge for Mr Dukakis is to establish widespread desire for an acceptable
alternative to Mr Bush.

Linda Bilmes, now with the Boston Consulting Group in London, has advised
several US political campaigns.

LANGUAGE: ENGLISH

GRAPHIC: Picture, no caption; Picture Bush, left, and Dukakis, dissecting the
swing voter

                   Copyright 1988 The Financial Times Limited


                              238 of 614 DOCUMENTS

                        Financial Times (London,England)

                              May 9, 1988, Monday

Bush Claim On Noriega Drug Dealing Challenged

BYLINE: Stewart Fleming, Washington

SECTION: SECTION I; Overseas News; Pg. 2

LENGTH: 336 words


Vice President George Bush's claim that he did not know until this year that
General Manuel Noriega, the Panamanian strongman, was deeply involved in drug
trafficking were challenged yesterday in a report in the New York Times.

The report said that Mr Bush, who seems certain to be the Republican Party's
presidential nominee, was told three years ago of allegations that Gen Noriega
was involved in drug smuggling.

The report could prove politically damaging.  Governor Michael Dukakis, the
Democrat who will probably be his challenger in the presidential election in
November, has criticised the Administration, and implicitly Mr Bush, for
continuing to support Gen Noriega even though it was aware that he was
facilitating the flow of drugs into the United States.

The New York Times report comes at the end of a week which has seen the Vice
President put constantly on the defensive in his campaign to succeed Mr Ronald
Reagan.  He has been plagued by a combination of verbal slips and the difficulty
posed by his need both to defend the Reagan record on which his candidacy is
founded while at the same time distancing himself from unpopular aspects of Mr
Reagan's period in office such as the Iran-contra scandal.

Mr Bush's verbal slips have reminded Republicans of his vulnerability as a
campaigner.  One of the more amusing came last week when, in describing his
relationship with the President he said: "For seven and a half years I have
worked alongside him and I am proud to be his partner.  We have had triumphs, we
have made mistakes, we have had sex ..." He quickly corrected himself: "setbacks
...  we have had setbacks," he said.

His campaign staff are more worried, however, by the problems Mr Bush is having
with aspects of Mr Reagan's legacy.  Last week two of his aides publicly
attacked the Attorney General, Mr Edwin Meese, who is under intense pressure to
resign on the grounds that his ethical standards are damaging the public
standing and morale of the Justice Department.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             May 10, 1988, Tuesday

Unforeseen Problem For The White House Stars

BYLINE: Stewart Fleming, US Editor, Washington

SECTION: SECTION I; Back Page; Pg. 46

LENGTH: 345 words


"I think this book is going to help the Reagan Administration," Mr Donald Regan,
the former White House Chief of Staff, was quoted yesterday as saying of his
memoirs.

It was a judgment which the White House did not share.  As the furore broke over
Mr Regan's revelations about the role Mrs Nancy Reagan and her astrologer have
played in the Reagan presidency, the White House was tart:

"Vindictiveness and revenge are not admirable qualities and are not worthy of
comment.  Donald Regan's attempts to defame the First Lady on Mother's Day, no
less, are certainly in that category."

The book is Mr Regan's assessment of the significance of the six years he spent
in the Reagan Administration.  Its primary motive is to refute the charge that
Mr Regan's stewardship of the White house helped to turn the Iran-Contra affair
into a political disaster.

Mr Regan blames Nancy Reagan for getting him "fired like a shoe clerk" from his
White House job in February 1987 as the Reagan presidency was rocked by the
Iran-Contra scandal.  He describes Mrs Reagan's role as "a shadowy distaff
presidency" in a White House in which the President is once again portrayed as
usually a passive bystander rubber stamping decisions reached by his staff.

Mr Regan refutes the charge in the Tower Report into the Iran-Contra affair that
he was the man "who must bear primary responsibility for the chaos that
descended on the White House" at the time.  Mr Regan maintains he was ignorant
of the evolution of the early decisions which led up to the arms for hostages
swaps.

Moreover, he claims his efforts to deal with the crisis when the story broke
were frustrated by Mrs Nancy Reagan and her "friend," a 60-year-old San
Francisco heiress who describes herself as a "political astrologer." Mrs Reagan
allegedly depended on her for advice about when the President should make
speeches or hold press conferences.

The man who is certain to be damaged by Mr Regan's vitriol is Vice-President
George Bush.  The strongest prop for Mr Bush's candidacy has been the Reagan
record.

LANGUAGE: ENGLISH

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                        Financial Times (London,England)

                             May 12, 1988, Thursday

Thursday Book Review

BYLINE: Lionel Barber

SECTION: SECTION I; Pg. 22

LENGTH: 975 words


For the Record From Wall Street to Washington by Donald T Regan.  Harcourt Brace
Jovanovich, Dollars 21.95

Donald Regan, like at least one too many figures in the Reagan administration,
is a former marine Lieutenant Colonel who got too big for his boots.  He reached
the peak of his power in late 1985 when, as White House Chief of Staff, he was
known in Washington as the Prime Minister, the most dominant presidential
adviser since Sherman Adams served Dwight Eisenhower.

For just over two years, until he was ousted in a palace coup in February 1987,
Mr Regan controlled access to President Reagan, assumed control of public
relations and counted among his duties telling a daily joke to the
commander-in-chief.

He never betrayed a lack of confidence in his own ability.  After the Reykjavik
mini-summit between Mr Reagan and the Soviet leader Mr Mikhail Gorbachev, which
many judged a failure, Mr Regan boasted he could turn opinion round: "Some of us
are like a shovel brigade that follows a parade down Main Street cleaning up."

Mr Regan has now downed tools.  In return for a Dollars 1 m advance
(subsequently donated to charity) he has set out what might politely be called
the revisionist view.  His account asks the reader, in effect, to suspend belief
about his reported power-grabs and to reject any notion that he bears
responsibility for the Iran-Contra arms-for-hostages scandal which drove him
from office.

What largely emerges in this self-serving and selective memoir is, to borrow one
of Mr Regan's chapter titles, a case of poison.  The vitriol drips off the page
as Mr Regan seeks, with single-minded vindictiveness, to wound the person whom
he blames for his fall from power: First Lady Nancy Reagan.

Mr Regan, who describes himself as a lifelong Republican Party supporter, seems
not to care that his revelations about Mrs Reagan's interest in astrology could
damage both the Reagan presidency and the chances of a Republican - George Bush,
the Vice President - winning the November election.

This may tell the reader something about party loyalty in the US but the more
important message is that Mr Regan wants his reputation back.  What he fails to
realise is that this book, more than anything else, will sully that reputation
for years to come.

This is a shame, because those who knew Don Regan when he came to Washington in
1981 as President Reagan's first Treasury Secretary, regarded him as an engaging
individual with a keen sense of humour and a door which was a good deal more
open to reporters than that of his successor Mr James Baker.

The son of a Boston policeman, Mr Regan saw action as a marine in the Pacific at
Guadalcanal and Okinawa.  After the Second World War, he joined Merrill Lynch,
the Wall Street brokerage house, rising to become chairman.  He took the firm
public in 1971 and benefited handsomely through his own stockholdings.

This book purports to give a behind-the-scenes insight into the Reagan
presidency.  In fact, it is wafer-thin in detail compared to an earlier
inside-the-White-House account penned by Mr David Stockman, President Reagan's
former budget director.  The style is cinematic: the President feeding the
squirrels each morning, the President fretting over a dead goldfish in Geneva,
Mr Reagan with Mr Gorbachev at Reykjavik and refusing to compromise on his
Strategic Defence Initiative anti-ballistic missile system.

The impression is of a submissive President, an isolated and rather lonely
individual, kept afloat by his inexhaustible stock of jokes and anecdotes and a
mail-bag which in 1985 contained up to 4,500 letters a day.

Once, in November 1984, he displayed vulnerability.  When Mr Regan threatened to
resign, the President turned to him and said: "You're the only friend I have
around here.  If you go, I'll have to get my hat and go with you."

Such comments reveal President Reagan's true weakness: his fundamentally flawed
judgment of character.  His indulgence stretches way beyond Mr Regan.  It
applies to Mr Ed Meese, the US Attorney General, who is stuck in a mire of
multiple conflicts of interest and ethics accusations.  It applies to Mr michael
Deaver, the Deputy White House Chief of Staff who could barely wait to make his
millions on the back of his White House connections.  And it applies to other
lesser known characters who somehow sneaked into the administration in 1981 and
1984 and stayed.

Mr Regan makes a strong case in denying responsibility for the Iran-Contra
scandal, even though it was run within shouting distance of his office by Lt Col
Oliver North.  One of the results of the enormous growth in the size of the
White House staff since the Second World War is that Mr Regan can state, quite
openly, that he spoke to Col North, one of the most powerful figures in the
bureaucracy, only once in two years.

Since Mr Regan regarded his job as primarily running domestic policy, he kept
his nose largely out of foreign affairs.  He argues that Col North and President
Reagan's former national security adviser Mr Robert McFarlane should take much
of the blame for the Iran-Contra fiasco.

But in the search for a fall-guy, Mr Regan was the fattest sheep to be thrown to
the congressional wolves.  He wanted to leave on his own terms; but Mrs Reagan
and a cabal of Californians organised his fall, and he left in disgrace.  A
strong President would have fired him months before.

In an afterword entitled "Reflections on Public Service", Mr Regan bemoans the
tendency to process the activities of Government into entertainment, and the
American tendency to trivialise the nation's business.  Yet this is precisely
what he has done with this book, both in its style and in its content.  As Mrs
Reagan's harassed astrologer in San Francisco said prophetically this week: "He
has turned the whole world into a circus".

LANGUAGE: ENGLISH

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                              241 of 614 DOCUMENTS

                        Financial Times (London,England)

                             May 26, 1988, Thursday

Thursday Book Review

BYLINE: Andrew Gowers

SECTION: SECTION I; Pg. 26

LENGTH: 934 words


The Eagle and the Lion: The Tragedy of American-Iranian relations by James A
Bill.  Yale University Press; 16.95 Pounds (pds).

Just after the Iranian revolution in February 1979, the great American
journalist I F Stone wrote: "The US government has a weakness for lost causes
and for persisting in monumental mis-judgements."

The tortured story of relations between the US and Iran, told incisively in this
book by one of America's top Iran scholars, contains much evidence of these twin
propensities.

James Bill, professor of government at William and Mary College, describes it as
a tragedy, and that is exactly right.  Apart from unity of time and place, all
the ingredients - a fall from grace, obsessive and passionate individuals,
inexorability and catharsis - are present.  There is a powerful sense of the
sins of one generation being visited on the next.  There is also a pertinent
series of morals at the end, giving the book the flavour of a significant
cautionary tale about American dealings with the Third World in general.

Given the recent turbulence in American-Iranian ties, it is as well to recall
the relative state of grace in which they emerged into the 1940s.  For nearly a
century, Iran had been a prey to intrigues between Britain and Russia.  Although
American influence was minimal before World War Two, many Iranians came to look
on the US as a potential ally against the embrace of the two imperial powers.

History was to prove otherwise.  The turning-point came in the early 1950s, when
the American Central Intelligence Agency was lured by Britain into joining a
covert operation to topple Mohammed Mossadegh, the nationalist Iranian prime
minister.  Thus, with Shah Mohammed Reza Pahlavi firmly back in control, began
the tragedy of Washington's deepening involvement with an absolute and
ultimately doomed ruler.

Subsequent administrations reinforced the trend which culminated under Jimmy
Carter with the revolution and seizure of Washington's Tehran embassy.

One striking theme of Bill's book is the continuity of recent Iranian history,
in which the 1979 revolution released waves of xenophobic frustration pent up
over decades.  It helps to explain the central role the US - the Great Satan -
has played in Iran's post-revolution demonology.  For decades beforehand,
opposition forces had been complaining about the Shah's encouragement of
American intrusion into Iranian society at all levels.

This, then, is the real tragedy: a clash between complete identification with
the Shah on the American side, and a poisonous web of conspiracy theories woven
around this perception by the Iranians.  The former rendered the US incapable of
appreciating the threats to the Peacock Throne or of dealing sensibly with Iran,
still a country of vital strategic importance, after its fall.

Bill is at his most instructive when examining the interplay of political and
personal forces which created this extraordinary case of tunnel vision.  Part of
the blindness resulted from the blight of "Soviet-centrism" in American foreign
policy.  Since the 1950s, the Americans were so obsessed with the Shah's role as
a bulwark against the communists on his northern border that they failed to look
closely enough at his own back yard.

The intelligence failure was compounded in the first place by ignorance and
insouciance.  American diplomats and politicians tended to take what the Shah
and his military and intelligence men told them on trust.  They completely
ignored the strength of religious opposition which ultimately revealed itself as
the driving force of the revolution.  Perhaps the book's most important
conclusion is that diplomats, policy-makers, journalists and other analysts need
to subject the "received wisdom" about any country, particularly in the
developing world, to constant critical scrutiny.

In the case of Iran, powerful institutional and personal interests - often
operating through narrow social channels which bypassed the formal machinery of
inter-governmental relations - conspired to keep the blinkers on in Washington.
Bill details the intense lobbying on behalf of the Shah undertaken by such
figures as Nelson and David Rockefeller and, after he left office, Henry
Kissinger - and the sympathetic ear turned to them by Zbigniew Brzezinski,
President Carter's National Security Advisor, among others.

Exacerbated by the bureaucratic warfare between government departments which has
so fouled up US foreign policy making in recent years, the lobbying effort moved
into top gear to promote what became America's most grievous mistake after the
revolution: admission of the dying, deposed Shah to the US for hospital
treatment, which sparked the seizure of America's embassy in Tehran and the
subsequent trail of humiliations reaching right up to the Iran-Contra affair.

Ironically, Bill argues, this last abortive opening to Iran was a correct move,
but conducted by the wrong people through the wrong intermediaries, under
pressure from the wrong ally (Israel).  The counterpoint to this is that
American perceptions which have helped to sour the US-Iran relationship since
well before the revolution are very much alive: witness President Reagan's
description of Iran last year as a "barbarous country".

The tale, of course, has been partially told many times before, but not with
such historical sweep or such command of both ends of a painful conflict.  For
anyone who wants to understand what is happening in the Gulf today, with US
warships still only a hair's breadth from confrontation with Iran, it is
essential reading.

LANGUAGE: ENGLISH

                   Copyright 1988 The Financial Times Limited


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                        Financial Times (London,England)

                              May 27, 1988, Friday

Fresh Blow For Bush As Press Chief Quits

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 350 words


Further evidence that Vice President George Bush's presidential campaign is in
trouble emerged yesterday when his chief spokesman, Mr Peter Teeley, said he
intended to resign.

Mr Teeley, a veteran of three national campaigns for the Vice President, accused
other Bush advisers of cutting him out of critical decisions and limiting his
access to Mr Bush, the likely Republican presidential nominee.

However, it seems equally likely that Mr Teeley, who favoured a more agressive
campaign style to overcome Mr Bush's decline in the polls, lost out to other
campaign officials who preferred a "wait and see" approach.

Mr Teeley - who says he wants to stay with the Bush campaign in a different
capacity - wanted the Vice President to toe a more independent line from the
Reagan administration.  For example, he pressed Mr Bush to distance himself from
the US Attorney General Mr Ed Meese who is facing a string of ethics charges.

Other key Bush aides including Mr Craig Fuller, chief of staff, are said to have
opposed Mr Teeley arguing that to break ranks five months before the November
presidential election would smack of panic.

Like Mr Bush, they believe that the precipitous decline in his popularity over
the past two months will reverse itself once the press begins to focus on the
shortcomings of Governor Michael Dukakis of Massachusetts, the overwhelming
favourite for the Democratic presidential nomination.

Mr Teeley said he intends to stay on as chief spokesman until the Bush campaign
finds a replacement.  For the past couple of months, it has proved a thankless
job with Mr Bush becoming increasingly angry about what he believes is negative
press coverage.

One of the problems is that the Vice President has cocooned himself from
reporters on the big national newspapers, preferring to give tightly controlled
interviews with the local press.  Consequently, the neglected national reporters
have focused their energies on Mr Bush's knowledge about the Iran-Contra
arms-for-hostages scandal and the drug-trafficking involving Panama's strongman
General Manuel Noriega.

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                        Financial Times (London,England)

                             June 10, 1988, Friday

Ruling Threatens Iran-Contra Prosecutor's Case

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 5

LENGTH: 450 words


The special prosecutor in the Iran-Contra affair has run into difficulties in
his case against former White House aide Lieutenant Colonel Oliver North, former
National Security Adviser Rear Admiral John Poindexter, and two others.  A judge
in Washington has ordered separate trials for the four and told the prosecutor,
Mr Lawrence Walsh, to decide whether to proceed to trial against Col North or
Admiral Poindexter.

Mr Walsh said yesterday that in the light of the order he wanted Col North to be
brought to trial first.

The ruling appears to threaten a central part of Mr Walsh's case - alleging a
conspiracy by the four men to defraud the US Government and cover up their
activities.  These are alleged to include selling arms to Iran and diverting the
profits to the Nicaraguan rebels, and other unauthorised covert operations.

More positively for Mr Walsh, it looks unlikely that US District Judge Gerhard
Gesell will dismiss the 23-count indictment on the grounds there is no case to
answer.  This raises the possibility of trials stretching into the presidential
campaign and more coverage of a scandal which has already hurt the Republican
Party candidate, Vice-President George Bush.

Mr Walsh's problems stem from last summer when the congressional committee
investigating the Iran-Contra scandal granted limited immunity from prosecution
to several witnesses, including Col North and Admiral Poindexter.

The House-Senate panel argued that agrant of immunity was the only way to
persuade witnesses to tell their story to the public, the primary goal of the
congressional inquiry.  Mr Walsh's warning that limited immunity would
jeopardise his case against Col North, Admiral Poindexter, retired Air Force
Major General Richard Secord and his business partner, Mr Albert Hakim, has
proved well-founded.

In pre-trial hearings in Washington, defence lawyers have successfully argued
that their clients should be allowed to use one another's immunised testimony to
defend against the charges.  To prevent access would deny the defendants a right
to a fair trial, Judge Gesell ruled.

Mr Walsh may not use any of the testimony - unless he can prove he secured the
material independently.  By calling for four separate trials, Judge Gesell has
forced Mr Walsh to lay out his entire case in the first instance.

As an alternative to trying Col North first, Mr Walsh proposed Col North and
Admiral Poindexter before the same judge, but with two separate juries.

However, the judge's order may persuade Mr Walsh to drop the ambitious
conspiracy charges and rethink his tactics, confining himself for example to
obstruction of justice and alleged bribery of government officials.

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                        Financial Times (London,England)

                             June 14, 1988, Tuesday

Waite 'Was Bait In Plot To Kill Gadaffi'

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 7

LENGTH: 236 words


Mr Terry Waite, the Anglican Church envoy, was set up as bait in an elaborate
plot to assassinate the Libyan leader Col Muammar Gadaffi hatched by the
disgraced White House aide Lt Col Oliver North, according to a new book.

The Reagan Administration rejected Col North's plan because it violated US law,
but it approved a bombing raid on Libya in April 1986 aimed at curbing Col
Gadaffi's support for international terrorism.

The revelations are contained in a new book by a CBS News reporter, Mr David
Martin, and a Wall Street Journal correspondent, Mr John Walcott, called Best
Laid Plan - the Inside Story of America's War on Terrorism.

According to the authors, Col North, the National Security Council aide later
sacked for his role in the Iran-Contra scandal, wanted Mr Waite to go to Tripoli
to enlist Col Gadaffi's support for releasing US hostages in Lebanon.

The idea was to persuade Col Gadaffi to remain in his headquarters during the
air raid instead of retiring to his concrete bunker.  In the event, Col Gadaffi
was near the site of the raid but survived the attack.

Mr Waite was apparently an unwitting pawn in Col North's scheme.  The Anglican
Church envoy was later abducted in Beirut while seeking the release of hostages
and remains a hostage himself.

Col North is set to be the first of four men tried for his role in the
Iran-Contra affair involving secret arms sales to Iran.

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                        Financial Times (London,England)

                            June 15, 1988, Wednesday

Howard Baker Resigns As White House Chief Of Staff

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 473 words


Mr Howard Baker, the White House Chief of Staff who guided President Reagan
through the troubles of the Iran-Contra scandal to the successes of two
super-power summits, announced his resignation for personal reasons yesterday.

Mr Baker, whose resignation will take effect on July 1, gave his wife's illness
as the main reason for leaving.  He will be replaced by Mr Kenneth Duberstein,
his deputy since March 1987, who will lead the White House through the final
seven months of Mr Reagan's presidency.

President Reagan said he had accepted Mr Baker's decision to resign with deep
regret, and described the former Tennessee Senator and Senate majority leader as
a "close friend and adviser" over the past 16 months.

Mr Baker's departure does not signal any dramatic upheaval in an administration
winding down in the run-up to the November general election.  However, Mr James
Baker, US Treasury Secretary, is widely expected to leave shortly after this
month's Toronto economic summit to assume command of Vice-President George
Bush's presidential campaign.

Mr Howard Baker replaced Mr Ronald Reagan as White House chief of staff in
February 1987 after a palace coup led by Mrs Nancy Reagan.  He took the job
reluctantly, having retired from the US Senate in 1984 to put a lucrative law
practice in his home state above further political ambitions.

As President Reagan acknowledged in his tribute yesterday, it was Mr Baker's
steady hand which held the White House together as first Congress, then a
special criminal prosecutor, investigated the Iran-Contra scandal, the
administration's secret arm sales to Iran and diversion of profits to the
Nicaraguan Contra rebels.

Mr Baker was instrumental in turning the administration away from confrontation
with the Democratic majority in Congress towards the creation of a bipartisan
foreign policy, particularly in the shift to better relations with the Soviet
Union.

The shift may have disappointed the conservatives, but it smoothed the way for
the Intermediate Nuclear Forces treaty, the historic pact eliminating a whole
class of missiles which was signed at the Washington summit last year, ratified
by the US Senate last month and finally approved by Mr Reagan and the Soviet
leader Mr Gorbachev at the Moscow summit.

In recent weeks, the Bush campaign has privately criticised Mr Baker for not
encouraging Mr Reagan to help their candidate.  They have also suggested he
still harbours support for the failed Republican contender and fellow Senator,
Mr Robert Dole of Kansas.  Such criticism - and the fact that his wife, Joy, is
still suffering ailments after cancer surgery six years ago - will not have
encouraged Mr Baker to stay in the job.

Thomas Griscom, White House communications director, and Mr Baker's right hand
man, is also expected to resign shortly.

LANGUAGE: ENGLISH

GRAPHIC: Picture Howard Baker, steady hand

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                            June 15, 1988, Wednesday

Wisecracking Backroom Boy Takes Over

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 250 words


Mr Kenneth Duberstein, who is to succeed Mr Howard Baker as White House chief of
staff, is a backroom political operator who has built a reputation as a skilled
Congressional lobbyist and hands-on manager, writes Lionel Barber.

A chubby chain-smoker from Brooklyn, New York, Mr Duberstein's wise-cracking
style contrasts to that of his predecessors - the silken Treasury Secretary Mr
James Baker, the imperious Mr Donald Regan and Mr Howard Baker, whose laid-back
manner betrays a crafty mind and an instinct for compromise.

Congressman Richard Cheney, himself a former White House chief of staff in the
Ford administration, describes Mr Duberstein as "an excellent staff man." As Mr
Baker's deputy since March 1987, Mr Duberstein plugged the gaps in day-to-day
management left by his more broad brush boss.

As chief of staff, Mr Duberstein will preside over 325 people, a measure of the
post-war growth of central government in Washington.  Though he is expected to
stick to the course laid out by Mr Baker, his position - and access to the
President - makes him a key player in the event of a crisis.

A political moderate, Mr Duberstein has worked for the late Senator Jacob Javits
of New York and former Mayor John Lindsay.  He first worked for Mr Reagan in
1981-83 as a lobbyist promoting the tax cuts on Capitol Hill.  After serving
briefly with a private Washington lobbying firm, he re-joined the White House
when it was in turmoil over the Iran-Contra arms for hostages scandal.

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                        Financial Times (London,England)

                            June 23, 1988, Thursday

Briefing On Pentagon Scandal

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 3

LENGTH: 393 words


The chief prosecutor in the Pentagon bribery scandal was set to brief Congress
yesterday on his two-year investigation covering senior civil servants and some
of the largest US defence contractors.

Mr Henry Hudson, US Attorney in Virginia, working closely with the FBI and US
Justice Department, is said to be seeking more than 100 indictments.  Some
members of the House of Representatives have been mentioned as targets of the
Federal investigation, but Mr Jim Wright, House Speaker, dismissed these reports
as rumours started by the Reagan Administration.

The scandal, which has gripped Washington as much as the Iran-Contra
arms-for-hostages affair last year, promises to run well into the presidential
election campaign.

Mr Pat Buchanan, the conservative commentator and former White House official,
said it could jeopardise President Reagan's great achievement: rearmament.
Writing in the Washington Times, he said: "To allow the left to use this scandal
to discredit and destroy what has been built would be to allow our adversaries
to convert foolish crimes into a national tragedy.  We let that happen to the
CIA and FBI; America can't afford a repetition of that folly."

President Reagan, appearing at a news conference at the end of the Toronto
summit on Tuesday, took a more relaxed view, describing fraud in Pentagon
purchasing as "understandable." He said he was "disappointed and upset" but
added that the Administration should take the credit for uncovering the scandal.

Investigators are focusing on senior Pentagon officials and defence contractors
who, using private defence consultants as go-betweens, trafficked in classified
information on bids and contracts for weapons systems.

Federal investigators have indicated that their probe has implicated up to 20
Pentagon officials, 15 defence companies and a number of private consultants.

During the Administration's military build-up, Congress increased its
involvement in procurement decisions.  One reason was that Mr Casper Weinberger,
as Defence Secretary, routinely refused to negotiate with Congress on budget
cuts.

Mr Weinberger's intransigence put the onus on Congress to reconcile the
differences between his budget request and what the legislature was prepared to
yield.  This encouraged congressional committees to manage the budget, one House
aide said.

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                        Financial Times (London,England)

                            June 29, 1988, Wednesday

Rafsanjani, Pragmatic Power Behind The Revolution

BYLINE: Richard Johns

SECTION: SECTION I; Overseas News; Pg. 4

LENGTH: 1089 words

HIGHLIGHT:
Iran on the defensive, Financial Times writers look at how the Tehran leadership
is coping with setbacks on the battlefield


Iran's recent war setbacks have placed the spotlight more firmly than ever on
Hojatoleslam Ali Akbar Hashemi Rafsanjani, the parliamentary Speaker who was
appointed acting Commander-in-Chief of the armed forces earlier this month.

In making the appointment, Ayatollah Ruhollah Khomeini, who is constitutionally
in charge fo the war effort, has confirmed Mr Rafsanjani as the second most
powerful man in the country after himself.  In the recent elections to the
Majlis (parliament) he was elected almost unopposed with a broad coalition of
support, generally defying the labels "radical" or "conservative".  Although his
relatively low clerical rank of hojatoleslam means that he cannot assume
Ayatollah Khomeini's formal mantle when the revolutionary leader dies, there is
little doubt that he will remain at the very centre of power.

Mr Rafsanjani, 57, is an astute, pragmatic man who has been on the inside of
Iran's Islamic revolution from the beginning.  The son of a successful pistachio
nut dealer in the town of Rafsanjan near Kerman, he paradoxically gained some
military experience when he and other "troublesome" young men were conscripted
into the Shah's Army in 1962 - but released from service when it was found that
young officers were coming under their influence.

When Khomeini was exiled to the holy city of Najaf in Iraq, Mr Rafsanjani was
one of a number of young clerics entrusted by him with continuing the
revolutionary mission, and subsequently kept in touch with the patriarch in
exile.  An excellent orator, he is the author of two books - one on Amir Kabir,
a prime minister of Nazreddin Shah in the late 19th century and a prominent
reformer, and another about the Palestinian question.

He was a founder-member of the Islamic Republic Party (dissolved last year), was
elected Speaker of the Majlis after the first election in 1980 and has held the
position ever since.  Mr Rafsanjani is credited with playing a crucial role in
giving the revolution a sense of direction when it came under serious challenge,
not the least with the bombing of the party headquarters which killed Ayatollah
Beheshti, the party's leader.

He has always been the foremost patron of the Islamic Revolutionary Guards.  His
close links with the Guards, or Pasdaran, have provided him with one of his
principal power bases.  Now as acting Commander-in-Chief, he is entrusted with
improving co-ordination between them and the regular army.  Lack of full
co-ordination has proved to be one of the great weaknesses of Iran's military
effort.

So what sort of flavour is Mr Rafsanjani likely to impart to Iranian policies in
post-Khomeini Iran?  The changes are likely to be subtle and may not be
immediately obvious.

Mr Rafsanjani has made no bones about his commitment to continuing the war until
Iran's aims are achieved.  Nor does he oppose the export of revolution.  In
1982, for instance, he is said personally to have encouraged Lebanese Shias of
the newly formed Islamic Amal, the forerunner of Hizbollah, to adopt more
militant policies - which resulted in the car bombings of the US and French
military contingents in Beirut.

He would not dream of disowning Hizbollah now, and if the freedom of hostages
held by Iran's proteges in Lebanon can be bargained for material benefit, he
would not argue against such a trade-off.

The crucial distinction lies in Mr Rafsanjani's pragmatism.  He believes export
of revolution can and should be pursued, so long as it does not interfere with
Iran's basic interests.  Thus, he was evidently infuriated by the hijacking of a
Kuwait Airways jumbo jet by a group of Shias to the Iranian city of Mashhad in
April - an event which occured just as the regime, virtually friendless in the
world, was trying to improve relations with Western countries.

Unlike some of the more extreme elements in Iran's revolutionary Government, Mr
Rafsanjani also believes that Iran can gain from dealing with foreign powers.
The clearest evidence for this emerged as a result of Washington's attempt to
swap arms for hostages in the Iran-Contra affair.  Mr Rafsanjani, although
closely involved in the secret dealings with Washington, triumphantly survived
attempts by Mr Mehdi Hashemi, the man in charge of Iran's terrorist activities
until his execution in September last year, to discredit him for it.

Mr Rafsanjani would have felt no shame at having supped with the "Great Satan"
at a decent distance.  For him, end justify means.  Iran wanted Hawk and TOW
missiles.  Its Islamic Revolution disciples in Lebanon held hostages.  He put on
a "feeler" to the effect that "the Americans knew what had to be done to improve
relations," said a CIA report in the summer of 1986 quoted by the Tower
Commission last year.

He may well have also been a prime mover in recent Iranian attempts to reopen a
dialogue with other Western nations in the light of Tehran's international
isolation.

The other subject on which Mr Rafsanjani has marked out a distinctive stance is
the economy.  He evidently sees this as a crucial issue now an increasingly
war-weary Iran - where open criticism of the continuation of the conflict has
surfaced - has lost the initiative on the battlefront.  He appears to favour a
greater concentration on domestic policies to compensate.

Too much is made of alleged rivalry between Mr Rafsanjani and other Iranian
leaders, in the opinion of veteran Iran-watchers.  It is true that Ayatollah
Hussein Ali Montazeri, Ayatollah's Khomeini's chosen successor as spiritual
leader, publicly criticised his decision to stand again as Majlis Speaker after
he was appointed commander-in-chief this month.  But although the two men are
not close collaborators, the heir-apparent - a man of lofty principle - is not
in any way a politician.

Despite speculation by exiled Iranian commentators to the contrary, Mr
Rafsanjani still appears to be on at least reasonable terms with Ali Ak bar
Mohtashami, the Minister of the Interior and Former Ambassador to Damascus, and
with Mr Ahmed Khomeini, son of the spiritual leader.

It is generally assumed that Mr Rafsanjani will be the chief power-broker when
the revolution's leader dies.  However, with the prospects of victory having
faded almost to oblivion, he could prove to be a scapegoat if an "honourable"
end to the conflict consistent with the regime's oft-stated terms is not
achieved.  Conversley, as a strong leader of consensus he could be the only man
with a strength to find a peace formula and gain acceptance for it.

LANGUAGE: ENGLISH

GRAPHIC: Picture Rafsanjani, links with Guards

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                        Financial Times (London,England)

                            June 30, 1988, Thursday

Court Ruling Clears Way For North Prosecution

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 6

LENGTH: 432 words


The US Supreme Court yesterday dealt a major defeat to the Reagan Administration
by upholding the independent special prosecutor law inspired by the Watergate
scandal and invoked in the Iran-Contra criminal conspiracy case.

The 7-1 ruling clears the way for the criminal trial of Lt Col Oliver North, the
White House aide fired for his role in the Iran-Contra scandal and leaves intact
the convictions of two former senior advisers to President Reagan.

The court's decision, widely seen as the most important of its term, means that
the 10-year-old law which created independent special prosecutors to investigate
possible crimes by top government officials is constitutional.  Congress passed
the Ethics in Government Act to shield investigations of the government from
political influence.  It was largely inspired by President Richard Nixon who in
1973 ordered the dismissal of the Watergate special prosecutor Prof Archibald
Cox.

In recent weeks, conservatives have led an outcry in the press against the
powers of special prosecutors who have been vigorously investigating alleged
corruption in the Reagan Administration.

Arguing that the special prosecutors' independence of the Justice Department
infringed the President's exclusive powers to enforce criminal laws, the
Administration and its conservative backers have also pointed out that the Act's
provisions do not apply to Congress.

The court rebutted the charges and in an ironic twist the 38-page majority
opinion was written by Chief Justice William Rehnquist, a Nixon appointee whom
President Reagan elevated in 1986 to head the court.

Chief Justice Rehnquist, often seen as one of the most powerful conservative
voices on the court bench, said that the law did not violate the
separation-of-power principles in the Constitution by interfering with the
functions of the executive branch.

The ruling will have the effect of leaving intact the conviction of Mr Michael
Deaver, a long-time confidant of Mrs Nancy Reagan and former top adviser to the
President, for perjury relating to his lobbying activities.  It also covers the
convictions of Mr Lyn Nofziger who has yet to serve a 90-day prison sentence for
illegal lobbying.  Mr Deaver's sentencing had been postponed until after the
court's ruling.

The prosecutors in the Iran-Contra case were given nominal appointments by the
US Justice Department to protect their investigation against legal challenges.
But the early part of the investigation was not covered and defence lawyers had
planned to mount court attacks if the law had been struck down.

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                        Financial Times (London,England)

                              July 1, 1988, Friday

Court Strikes At Heart Of Reagan Creed

BYLINE: Lionel Barber, Washington

SECTION: SECTION I; American News; Pg. 4

LENGTH: 357 words


The US Supreme Court delivered a judgment this week which will go down as one of
the most humiliating political defeats suffered by the administration of
President Ronald Reagan.

By upholding 7-to-1 the constitutionality of the 1978 Ethics in Government law,
the court has struck at the heart of the conservative creed that there is a need
to restore the power of the Presidency at the expense of a usurping Congress.

This creed, in its own way, is as politically significant as the supply-side
economics and deregulation which characterised the early years of Mr Reagan's
presidency.

Congress passed the Ethics in Government Act in response to the Watergate
scandal when, in 1973, President Richard Nixon ordered the Justice Department to
fire a special prosecutor, Professor Archibald Cox, who had been appointed to
investigate the affair.  The aim of legislators was to shield future criminal
probes of high-level government officials from political influence.

In the last seven years, the act has been used to investigate some of President
Reagan's closest advisers including Mr Ed Meese, the US Attorney General, Mr
Michael Deaver, the former deputy White House chief of staff, as well as some of
those involved in the Iran-Contra arms-for-hostages scandal.

But the verdict's impact lies beyond these individual cases because it directly
addresses the post-Watergate debate over the respective powers of the executive
and legislature.

The conservatives' basic legal objection is that Congress, through the law, has
infringed the power of the executive to administer justice, thus breaching the
separation of powers required under the Constitution.

One of the stunning aspects of the ruling was that the majority opinion was
written by Chief Justice William Rehnquist, who was appointed to the court by Mr
Nixon and promoted by President Reagan to his present position, no doubt because
both presidents considered him to be a reliable conservative.

That Mr Rehnquist should have disappointed is one more indication, if it was
ever needed, that the Supreme Court remains an institution which defies
political category.

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                        Financial Times (London,England)

                            July 6, 1988, Wednesday

Meese Seizes The Opportunity To Bow Out

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 4

LENGTH: 777 words

HIGHLIGHT:
Lionel Barber watches the departure of the last of the Administration's old
guard


It was always going to be difficult for Mr Ed Meese to find a dignified exit.

For 13 months, the US Attorney General has been involved in a wide-ranging
criminal inquiry into his personal financial dealings, his conduct in office and
even his wife Ursula's financial affairs.

So when Mr James McKay, the court-appointed special prosecutor leading the
investigation, finally filed a report yesterday saying there were no grounds for
legal action against him, Mr Meese seized the initiative and said he could now
leave the Administration with a clear name.

This has traces of the sunny optimism so characteristic of Mr Meese's old
friend, President Ronald Reagan.  Mr McKay's still-secret report runs to some
800 pages, more than enough to chronicle a history of bad judgment, misplaced
loyalty, and an insensitivity to ethical impropriety which has caused a
commentator once to remark that the US Attorney General had "a skin as thick as
nogga hide."

Mr Meese's registration also does not forestall the prospect of more damaging
public statements about the Attorney General later this month.  The Senate
Judiciary Committee plans to hear testimony from two senior US Justice
Department officials - one of whom was in charge of the criminal division, the
other Mr Meese's deputy - about why they resigned in protest from their posts
late last May.  One official, Mr William Weld, will be asked why he told Mr
Meese that he reckoned there was a case for indictment against the Attorney
General.

More positively for the Republican party, his resignation does remove an
embarrassing public figure from the political stage before the national
convention in mid-August which will officially anoint Vice President George Bush
as the party's candidate for President.  While Mr Bush refused to criticise Mr
Meese in public, his aides were privately seething that he refused to step down
earlier.  Mr Bush's claim to seek higher ethical standards in public office were
simply not compatible with Mr Meese's own record.

In a wider sense, Mr Meese's departure - he intends to step down at the end of
this month or in early August - signals that the curtain has finally dropped on
the Reagan Administration's second term in office.  For he, more than anyone
else, represented the old guard from California, the men like Michael Deaver and
Lyn Nofziger who swept into town in 1980 and ended up being swept out by
scandal.

It was appropriate that Ed Meese chose Sacramento (where he was reviewing a
state anti-marijuana campaign) to announce his resignation.  He was a close
friend of both of the Reagans for more than 20 years, back to the days when Mr
Reagan was Governor of California.  Mr Meese has been entangled in controversy
and investigation almost from the day his tenure as the nation's top law
enforcement officer began in 1985.

He has undergone official scrutiny on matters ranging from his inquiry into the
Iran-Contra scandal to his role in an aborted Iraqi pipeline deal that alleged
payoffs to Israeli officials.

None of the inquiries has led to any criminal charges against Meese, who
steadfastly proclaimed his innocence.

Still, the appearance of insensitivity to ethical concerns time and again
prompted many members of Congress - and likely Democratic presidential candidate
Michael Dukakis and his rival, Mr Jesse Jackson - to demand that Mr Meese quit
or be fired from his job as head of the Justice Department.

But Mr Reagan has stood up for his old friend over and over.

Yesterday evening, the President, speaking to reporters on the White House lawn,
described him as "a good friend and a darned good Attorney General".

Mr Meese has argued, with some justification, that he became a lightning rod for
liberal attacks.  He was after all a much easier target than Ronald Reagan.  His
campaigns against pornography, drugs and liberal activism in the judiciary enjoy
plenty of support among Americans, though most of them do not inhabit Washington
where the majority of his critics gathered.

He could also point out, fairly, that several other Reagan Administration
officials - notably the former Labour Secretary Mr Raymond Donovan - had been
targeted, investigated but finally exonerated to the degree that no prima facie
case of criminal conduct was established.

But, in the end, the question comes down to Mr Meese's confusion of the personal
and public good.  It was significant that last month, when he sacked his widely
respected chief spokesman, Mr Terry Eastland, from the Justice Department, even
the conservatives turned against him.  From that point on, it was only a
question of when he was prepared to take the fall.

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                        Financial Times (London,England)

                             July 7, 1988, Thursday

Meese, Last Of The Reagan Old Guard, Bows Out

BYLINE: Lionel Barber

SECTION: SECTION I; American News; Pg. 5

LENGTH: 942 words

HIGHLIGHT:
Lionel Barber on the US Attorney General's exit


It was always going to be difficult for Mr Ed Meese to make a dignified exit.

For 13 months, the US Attorney General has been involved in a wide-ranging
criminal inquiry into his personal monetary dealings, his conduct in office,
even his wife Ursula's financial affairs.

And so when Mr James McKay, the court-appointed special prosecutor leading the
investigation, finally filed a report on Tuesday saying there were no grounds
for legal action against him, Mr Meese said he had been completely vidicated and
could now leave the Administration with a clear name.

This has traces of the sunny optimism so characteristic of Mr Meese's old
friend, President Ronald Reagan, who he served as legal adviser and chief of
staff when Mr Reagan was governor of California 20 years ago.  The Attorney
General has not even read Mr McKay's still-secret report which runs to some 800
pages, more than enough to chronicle a history of bad judgment, misplaced
loyalty, and an insensitivity to ethical impropriety.

His resignation, to take effect at the beginning of August, forestalls an
internal Justice Department inquiry into his conduct, but it is by no means the
end of the affair.  The Senate Judiciary Committee plans to hear testimony later
this month from two senior US Justice Department officials - one of whom was in
charge of the criminal division, the other Mr Meese's deputy - about why they,
along with six aides, resigned their posts late last May.  The first official,
Mr William Weld, will be asked why he told Mr Meese that he reckoned there was a
case for indictment against the Attorney General.

More positively for the Republican party, Mr Meese's departure removes an
embarrassing public figure from the political stage before the national
convention in mid-August which will officially anoint Vice President George Bush
as the party's candidate for President.  While Mr Bush has refused to criticise
Mr Meese in public, his statement on Tuesday night said it all: "Ed did the
right thing and I wish him well."

The general criticism of Mr Meese is that he stood as a symbol of the ethical
improprieties of the Reagan Administration which has seen dozens of officials
leave office under a cloud, the so-called _sleaze factor."

More specifically, it is alleged that he lobbied on behalf of several private
ventures in which his lawyer and close friend Mr E Robert Wallach had a personal
financial stake.  These included an Iraqi Dollars 1 bn pipeline project and a
New York City defence contractor, the Wedtech Corporation, which has been
accused of bribing public officials in exchange for their assistance.

Other questionable activities included Mr Meese's meetings with Regional Bell
Telephone Companies and his favourable decision on their behalf at a time when
he owned Dollars 14,000 of phone industry shares.  His wife also came under
scrutiny when it was revealed that a Washington real estate arranged a Dollars
40,000 a year salary for her before the company was awarded a Dollars 50 m lease
on Justice Department offices.

Mr Meese says the stream of revelations about his connection with Mr Wallach and
his personal financial affairs were part of a liberal witchhunt to hound him out
of office.  This argument has some merit.  He was, after all, a much easier
target than the ever-popular Mr Reagan.  His campaigns against pornography,
drugs and abortion enjoy wide support among Americans - but less so in
Washington where most of his critics gathered.

In part, this was a legacy of his lengthy Senate confirmation process as
attorney general, which was held up for a year while his financial affairs were
the subject of an earlier special prosecutor investigation.  When in 1985 he was
finally cleared, Mr Meese set out to push his conservative agenda with a
vengeance, declaring that the Supreme Court's rulings were not the law of the
land, attacking the Miranda ruling requiring police to inform suspects of their
rights and pushing conservatives into Federal judgeships.

That his campaign soon foundered was largely his own fault; he became so
enmeshed in investigations of his own conduct that his political effectiveness
was reduced to a minimum.

Last year, he was heavily censured for his initial inquiry into the Iran-Contra
scandal.  After his initial discovery of the illicit diversion of funds from US
arms sales to Iran to the Nicaraguan rebels, he stopped taking notes and failed
to take steps to prevent the "shredding party" presided over by Lt Col Oliver
North.  Later, he suffered further embarrassment when the Senate rejected a
conservative appointee to the Supreme Court, Judge Robert Bork.

More than anyone else, Mr Meese represented the old guard from California, the
men like Michael Deaver and Lyn Nofziger who swept into town in 1980 and ended
up being swept out by scandal.

It was appropriate that Ed Meese chose Sacramento - where he had just supervised
a raid on a nearby marijuana plantation - to announce his resignation.  It was
there that he first served Ronald Reagan and throughout his difficulties he
remained a close friend of Ronald and Nancy Reagan.  Speaking to reporters on
the White House lawn, the President described him as "a good friend and a darned
good attorney general."

In the end, the question comes down to Mr Meese's confusion of the personal and
public good.  It was significant that last month, when he sacked his widely
respected chief spokesman Mr Terry Eastland from the Justice Department for not
defending him properly, even the conservatives turned against him.  From that
point on, it was only a question of when he was prepared to take the fall.

LANGUAGE: ENGLISH

GRAPHIC: Picture Meese, 'Doing the right thing'

                   Copyright 1988 The Financial Times Limited


                              253 of 614 DOCUMENTS

                        Financial Times (London,England)

                             July 29, 1988, Friday

US And Iran Edge A Little Closer

BYLINE: Andrew Gowers

SECTION: SECTION I; Overseas News; Pg. 3

LENGTH: 708 words

HIGHLIGHT:
Andrew Gowers believes the two sides may be groping towards a fresh start


The signals coming out of Washington, New York and Tehran are confused, but they
all convey a similar impression: that after nearly 10 years of mutual
incomprehension and hostility, the US and Iran are groping their way towards a
new relationship with potentially profound implications for the politics of both
countries, for the Western hostages in Beirut and for America's dealings in the
Middle East.

Since Iran suddenly accepted the principle of a Gulf ceasefire last week, the
Reagan Administration has made a series of overtures to the Tehran leadership,
calling on Iran to establish a "single authoritative channel" for a dialogue
with Washington and for talks on the plight of American hostages held by
pro-Iranian groups in Lebanon.

The response from Tehran, despite the regime's unremitting anti-American
rhetoric, has been surprisingly conciliatory.  And in New York, Mr Javier Perez
de Cuellar, the UN Secretary-General, has sought to capitalise on the rapidly
changing political climate by bringing the hostage issue into his negotiations
on a ceasefire with Mr Ali Akbar Velayati, the Iranian Foreign Minister.

General Vernon Walters, Washington's UN ambassador, said on Wednesday night that
he believed the Secretary-General's good offices could help.  "What was
ineffective in the old days may not be so today.  Things are moving, things are
changing," he proclaimed.

In effect, the Iranian peace move appears to have broken a much bigger logjam.
Washington and Tehran were unable to improve relations so long as the latter
flouted the UN Security Council's calls for a ceasefire, and so long as the US
was perceived to be tilting towards Iraq in the war.

The hostages, hitherto a useful tool of Iranian foreign policy, were also the
principal victims of the stand-off.  Conversely, with Iran now determinedly
pursuing the objective of better ties with the West, the Beirut captives begin
to look more of a hindrance than a help.

The US has insisted throughout that there is no question of a direct deal with
Iran for the release of the hostages.  That may well be true in the strictest
sense - especially given the humiliations of the Iran-Contra affair - but it is
also beside the point.  For as Iran has made clear over the past week, a general
warming of relations between the two countries is bound to have an effect on its
attitude to securing the captives' release.

For the Reagan Administration in an election year, these developments hold
distinct promise.  A public opening to Iran would help to exorcise the ghosts of
Washington's secret trading of arms for hostages in 1985-86.

The return of the nine Americans held in Beirut would be a big boost for the
presidential election campaign of Mr Geo